H. R. 2488—163 
(2) ONE-PARTICIPANT RETIREMENT PLAN DEFINED.—For pur-
poses of this subsection, the term ‘‘one-participant retirement 
plan’’ means a retirement plan that— 
(A) on the first day of the plan year— 
(i) covered only the employer (and the employer’s 
spouse) and the employer owned the entire business 
(whether or not incorporated), or 
(ii) covered only one or more partners (and their 
spouses) in a business partnership (including partners 
in an S or C corporation), 
(B) meets the minimum coverage requirements of sec-
tion 410(b) of the Internal Revenue Code of 1986 without 
being combined with any other plan of the business that 
covers the employees of the business, 
(C) does not provide benefits to anyone except the 
employer (and the employer’s spouse) or the partners (and 
their spouses), 
(D) does not cover a business that is a member of 
an affiliated service group, a controlled group of corpora-
tions, or a group of businesses under common control, 
and 
(E) does not cover a business that leases employees. 
(3) OTHER
DEFINITIONS.—Terms used in paragraph (2) 
which are also used in section 414 of the Internal Revenue 
Code of 1986 shall have the respective meanings given such 
terms by such section. 
(b) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR PLANS WITH 
FEWER THAN 25 EMPLOYEES.—In the case of a retirement plan 
which covers less than 25 employees on the first day of the plan 
year and meets the requirements described in subparagraphs (B), 
(D), and (E) of subsection (a)(2), the Secretary of the Treasury 
shall provide for the filing of a simplified annual return that is 
substantially similar to the annual return required to be filed 
by a one-participant retirement plan. 
(c) EFFECTIVE DATE.—The provisions of this section shall take 
effect on January 1, 2001. 
SEC. 1257. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE RESO-
LUTION SYSTEM. 
The Secretary of the Treasury shall continue to update and 
improve the Employee Plans Compliance Resolution System (or 
any successor program) giving special attention to— 
(1) increasing the awareness and knowledge of small 
employers concerning the availability and use of the program, 
(2) taking into account special concerns and circumstances 
that small employers face with respect to compliance and correc-
tion of compliance failures, 
(3) extending the duration of the self-correction period 
under the Administrative Policy Regarding Self-Correction for 
significant compliance failures, 
(4) expanding the availability to correct insignificant 
compliance failures under the Administrative Policy Regarding 
Self-Correction during audit, and 
(5) assuring that any tax, penalty, or sanction that is 
imposed by reason of a compliance failure is not excessive 
and bears a reasonable relationship to the nature, extent, and 
severity of the failure. 
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H. R. 2488—164 
SEC. 1258. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS. 
(a) MODIFICATION
OF
PHASE-IN
OF
GUARANTEE.—Section 
4022(b)(5) of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1322(b)(5)) is amended to read as follows: 
‘‘(5)(A) For purposes of this paragraph, the term ‘majority 
owner’ means an individual who, at any time during the 60-month 
period ending on the date the determination is being made— 
‘‘(i) owns the entire interest in an unincorporated trade 
or business, 
‘‘(ii) in the case of a partnership, is a partner who owns, 
directly or indirectly, 50 percent or more of either the capital 
interest or the profits interest in such partnership, or 
‘‘(iii) in the case of a corporation, owns, directly or 
indirectly, 50 percent or more in value of either the voting 
stock of that corporation or all the stock of that corporation. 
For purposes of clause (iii), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 shall apply 
(determined without regard to section 1563(e)(3)(C)). 
‘‘(B) In the case of a participant who is a majority owner, 
the amount of benefits guaranteed under this section shall equal 
the product of— 
‘‘(i) a fraction (not to exceed 1) the numerator of which 
is the number of years from the later of the effective date 
or the adoption date of the plan to the termination date, and 
the denominator of which is 10, and 
‘‘(ii) the amount of benefits that would be guaranteed under 
this section if the participant were not a majority owner.’’. 
(b) MODIFICATION OF ALLOCATION OF ASSETS.— 
(1) Section 4044(a)(4)(B) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is 
amended by striking ‘‘section 4022(b)(5)’’ and inserting ‘‘section 
4022(b)(5)(B)’’. 
(2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is 
amended— 
(A) by striking ‘‘(5)’’ in paragraph (2) and inserting 
‘‘(4), (5),’’, and 
(B) by redesignating paragraphs (3) through (6) as 
paragraphs (4) through (7), respectively, and by inserting 
after paragraph (2) the following: 
‘‘(3) If assets available for allocation under paragraph (4) 
of subsection (a) are insufficient to satisfy in full the benefits 
of all individuals who are described in that paragraph, the 
assets shall be allocated first to benefits described in subpara-
graph (A) of that paragraph. Any remaining assets shall then 
be allocated to benefits described in subparagraph (B) of that 
paragraph. If assets allocated to such subparagraph (B) are 
insufficient to satisfy in full the benefits described in that 
subparagraph, the assets shall be allocated pro rata among 
individuals on the basis of the present value (as of the termi-
nation date) of their respective benefits described in that 
subparagraph.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 4021 of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1321) is amended— 
(A) in subsection (b)(9), by striking ‘‘as defined in sec-
tion 4022(b)(6)’’, and 
(B) by adding at the end the following: 
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H. R. 2488—165 
‘‘(d) For purposes of subsection (b)(9), the term ‘substantial 
owner’ means an individual who, at any time during the 60-month 
period ending on the date the determination is being made— 
‘‘(1) owns the entire interest in an unincorporated trade 
or business, 
‘‘(2) in the case of a partnership, is a partner who owns, 
directly or indirectly, more than 10 percent of either the capital 
interest or the profits interest in such partnership, or 
‘‘(3) in the case of a corporation, owns, directly or indirectly, 
more than 10 percent in value of either the voting stock of 
that corporation or all the stock of that corporation. 
For purposes of paragraph (3), the constructive ownership rules 
of section 1563(e) of the Internal Revenue Code of 1986 shall 
apply (determined without regard to section 1563(e)(3)(C)).’’. 
(2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) is 
amended by striking ‘‘section 4022(b)(6)’’ and inserting ‘‘section 
4021(d)’’. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to plan termi-
nations— 
(A) under section 4041(c) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1341(c)) with 
respect to which notices of intent to terminate are provided 
under section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) 
after December 31, 2000, and 
(B) under section 4042 of such Act (29 U.S.C. 1342) 
with respect to which proceedings are instituted by the 
corporation after such date. 
(2) CONFORMING AMENDMENTS.—The amendments made by 
subsection (c) shall take effect on the date of the enactment 
of this Act. 
SEC. 1259. MODIFICATION OF EXCLUSION FOR EMPLOYER PROVIDED 
TRANSIT PASSES. 
(a) IN GENERAL.—Section 132(f )(3) (relating to cash reimburse-
ments) is amended by striking the last sentence. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 1260. REPEAL OF THE MULTIPLE USE TEST. 
(a) IN GENERAL.—Paragraph (9) of section 401(m) is amended 
to read as follows: 
‘‘(9) REGULATIONS.—The Secretary shall prescribe such 
regulations as may be necessary to carry out the purposes 
of this subsection and subsection (k), including regulations 
permitting appropriate aggregation of plans and contributions.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to years beginning after December 31, 2000. 
SEC. 1261. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE, AND 
LINE OF BUSINESS RULES. 
(a) NONDISCRIMINATION.— 
(1) IN GENERAL.—The Secretary of the Treasury shall, by 
regulation, provide that a plan shall be deemed to satisfy the 
requirements of section 401(a)(4) of the Internal Revenue Code 
of 1986 if such plan satisfies the facts and circumstances test 
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H. R. 2488—166 
under section 401(a)(4) of such Code, as in effect before January 
1, 1994, but only if— 
(A) the plan satisfies conditions prescribed by the Sec-
retary to appropriately limit the availability of such test, 
and 
(B) the plan is submitted to the Secretary for a deter-
mination of whether it satisfies such test. 
Subparagraph (B) shall only apply to the extent provided by 
the Secretary. 
(2) EFFECTIVE DATES.— 
(A) REGULATIONS.—The regulation required by para-
graph (1) shall apply to years beginning after December 
31, 2000. 
(B) CONDITIONS
OF
AVAILABILITY.—Any condition of 
availability prescribed by the Secretary under paragraph 
(1)(A) shall not apply before the first year beginning not 
less than 120 days after the date on which such condition 
is prescribed. 
(b) COVERAGE TEST.— 
(1) IN GENERAL.—Section 410(b)(1) (relating to minimum 
coverage requirements) is amended by adding at the end the 
following: 
‘‘(D) In the case that the plan fails to meet the require-
ments of subparagraphs (A), (B) and (C), the plan— 
‘‘(i) satisfies subparagraph (B), as in effect imme-
diately before the enactment of the Tax Reform Act 
of 1986, 
‘‘(ii) is submitted to the Secretary for a determina-
tion of whether it satisfies the requirement described 
in clause (i), and 
‘‘(iii) satisfies conditions prescribed by the Sec-
retary by regulation that appropriately limit the avail-
ability of this subparagraph. 
Clause (ii) shall apply only to the extent provided by the 
Secretary.’’. 
(2) EFFECTIVE DATES.— 
(A) IN GENERAL.—The amendment made by paragraph 
(1) shall apply to years beginning after December 31, 2000. 
(B) CONDITIONS
OF
AVAILABILITY.—Any condition of 
availability prescribed by the Secretary under regulations 
prescribed by the Secretary under section 410(b)(1)(D) of 
the Internal Revenue Code of 1986 shall not apply before 
the first year beginning not less than 120 days after the 
date on which such condition is prescribed. 
(c) LINE OF BUSINESS RULES.—The Secretary of the Treasury 
shall, on or before December 31, 2000, modify the existing regula-
tions issued under section 414(r) of the Internal Revenue Code 
of 1986 in order to expand (to the extent that the Secretary deter-
mines appropriate) the ability of a pension plan to demonstrate 
compliance with the line of business requirements based upon the 
facts and circumstances surrounding the design and operation of 
the plan, even though the plan is unable to satisfy the mechanical 
tests currently used to determine compliance. 
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H. R. 2488—167 
SEC. 1262. EXTENSION TO INTERNATIONAL ORGANIZATIONS OF MORA-
TORIUM ON APPLICATION OF CERTAIN NONDISCRIMINA-
TION RULES APPLICABLE TO STATE AND LOCAL PLANS. 
(a) IN
GENERAL.—Subparagraph (G) of section 401(a)(5), 
subparagraph (H) of section 401(a)(26), subparagraph (G) of section 
401(k)(3), and paragraph (2) of section 1505(d) of the Taxpayer 
Relief Act of 1997 are each amended by inserting ‘‘or by an inter-
national organization which is described in section 414(d)’’ after 
‘‘or instrumentality thereof)’’. 
(b) CONFORMING AMENDMENTS.— 
(1) The headings for subparagraph (G) of section 401(a)(5) 
and subparagraph (H) of section 401(a)(26) are each amended 
by 
inserting 
‘‘AND
INTERNATIONAL
ORGANIZATION’’ 
after 
‘‘GOVERNMENTAL’’. 
(2) Subparagraph (G) of section 401(k)(3) is amended by 
inserting ‘‘STATE
AND
LOCAL
GOVERNMENTAL
AND
INTER-
NATIONAL ORGANIZATION PLANS.—’’ after ‘‘(G)’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to years beginning after December 31, 2000. 
Subtitle F—Plan Amendments 
SEC. 1271. PROVISIONS RELATING TO PLAN AMENDMENTS. 
(a) IN GENERAL.—If this section applies to any plan or contract 
amendment— 
(1) such plan or contract shall be treated as being operated 
in accordance with the terms of the plan during the period 
described in subsection (b)(2)(A), and 
(2) such plan shall not fail to meet the requirements of 
section 411(d)(6) of the Internal Revenue Code of 1986 by 
reason of such amendment. 
(b) AMENDMENTS TO WHICH SECTION APPLIES.— 
(1) IN GENERAL.—This section shall apply to any amend-
ment to any plan or annuity contract which is made— 
(A) pursuant to any amendment made by this title, 
or pursuant to any regulation issued under this title, and 
(B) on or before the last day of the first plan year 
beginning on or after January 1, 2003. 
In the case of a government plan (as defined in section 414(d) 
of the Internal Revenue Code of 1986), this paragraph shall 
be applied by substituting ‘‘2005’’ for ‘‘2003’’. 
(2) CONDITIONS.—This section shall not apply to any 
amendment unless— 
(A) during the period— 
(i) beginning on the date the legislative or regu-
latory amendment described in paragraph (1)(A) takes 
effect (or in the case of a plan or contract amendment 
not required by such legislative or regulatory amend-
ment, the effective date specified by the plan), and 
(ii) ending on the date described in paragraph 
(1)(B) (or, if earlier, the date the plan or contract 
amendment is adopted), 
the plan or contract is operated as if such plan or contract 
amendment were in effect, and 
(B) such plan or contract amendment applies retro-
actively for such period. 
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H. R. 2488—168 
TITLE XIII—MISCELLANEOUS 
PROVISIONS 
Subtitle A—Provisions Primarily Affecting 
Individuals 
SEC. 1301. CONSISTENT TREATMENT OF SURVIVOR BENEFITS FOR 
PUBLIC SAFETY OFFICERS KILLED IN THE LINE OF DUTY. 
Subsection (b) of section 1528 of the Taxpayer Relief Act of 
1997 (Public Law 105–34) is amended by striking the period and 
inserting ‘, and to amounts received in taxable years beginning 
after December 31, 1999, with respect to individuals dying on 
or before December 31, 1996.’’. 
SEC. 1302. EXPANSION OF DC HOMEBUYER TAX CREDIT. 
(a) EXPANSION
OF INCOME LIMITATION.—Section 1400C(b)(1) 
(relating to limitation based on modified adjusted gross income) 
is amended— 
(1) by striking ‘‘$110,000’’ in subparagraph (A)(i) and 
inserting ‘‘$140,000’’, and 
(2) by inserting ‘‘($40,000 in the case of a joint return)’’ 
after ‘‘$20,000’’ in subparagraph (B). 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to purchases on or after the date of the enactment 
of this Act. 
SEC. 1303. NO FEDERAL INCOME TAX ON AMOUNTS AND LANDS 
RECEIVED BY HOLOCAUST VICTIMS OR THEIR HEIRS. 
(a) IN GENERAL.—For purposes of the Internal Revenue Code 
of 1986, gross income shall not include— 
(1) any amount received by an individual (or any heir 
of the individual)— 
(A) from the Swiss Humanitarian Fund established 
by the Government of Switzerland or from any similar 
fund established by any foreign country, or 
(B) as a result of the settlement of the action entitled 
‘‘In re Holocaust Victims’ Asset Litigation’’, (E.D. NY), C.A. 
No. 96–4849, or as a result of any similar action; and 
(2) the value of any land (including structures thereon) 
recovered by an individual (or any heir of the individual) from 
a government of a foreign country as a result of a settlement 
of a claim arising out of the confiscation of such land in connec-
tion with the Holocaust. 
(b) EFFECTIVE DATE.—This section shall apply to any amount 
received on or after the date of the enactment of this Act. 
Subtitle B—Provisions Primarily Affecting 
Businesses 
SEC. 1311. DISTRIBUTIONS FROM PUBLICLY TRADED PARTNERSHIPS 
TREATED AS QUALIFYING INCOME OF REGULATED 
INVESTMENT COMPANIES. 
(a) IN GENERAL.—Paragraph (2) of section 851(b) (defining regu-
lated investment company) is amended by inserting ‘‘income derived 
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H. R. 2488—169 
from an interest in a publicly traded partnership (as defined in 
section 7704(b)),’’ after ‘‘dividends, interest,’’. 
(b) SOURCE FLOW-THROUGH RULE NOT TO APPLY.—The last 
sentence of section 851(b) is amended by inserting ‘‘(other than 
a publicly traded partnership (as defined in section 7704(b)))’’ after 
‘‘derived from a partnership’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2000. 
SEC. 1312. SPECIAL PASSIVE ACTIVITY RULE FOR PUBLICLY TRADED 
PARTNERSHIPS TO APPLY TO REGULATED INVESTMENT 
COMPANIES. 
(a) IN GENERAL.—Subsection (k) of section 469 (relating to 
separate application of section in case of publicly traded partner-
ships) is amended by adding at the end the following new para-
graph: 
‘‘(4) APPLICATION TO REGULATED INVESTMENT COMPANIES.— 
For purposes of this section, a regulated investment company 
(as defined in section 851) holding an interest in a publicly 
traded partnership shall be treated as a taxpayer described 
in subsection (a)(2) with respect to items attributable to such 
interest.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2000. 
SEC. 1313. LARGE ELECTRIC TRUCKS, VANS, AND BUSES ELIGIBLE 
FOR DEDUCTION FOR CLEAN-FUEL VEHICLES IN LIEU 
OF CREDIT. 
(a) IN GENERAL.—Paragraph (1) of section 30(c) (relating to 
credit for qualified electric vehicles) is amended by adding at the 
end the following new flush sentence: 
‘‘Such term shall not include any vehicle described in subclause 
(I) or (II) of section 179A(b)(1)(A)(iii).’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to property placed in service after December 31, 1999. 
SEC. 1314. MODIFICATIONS TO SPECIAL RULES FOR NUCLEAR 
DECOMMISSIONING COSTS. 
(a) REPEAL
OF LIMITATION
ON DEPOSITS INTO FUND BASED 
ON COST OF SERVICE.—Subsection (b) of section 468A is amended 
to read as follows: 
‘‘(b) LIMITATION ON AMOUNTS PAID INTO FUND.—The amount 
which a taxpayer may pay into the Fund for any taxable year 
shall not exceed the ruling amount applicable to such taxable year.’’. 
(b) CLARIFICATION OF TREATMENT OF FUND TRANSFERS.—Sub-
section (e) of section 468A is amended by adding at the end the 
following new paragraph: 
‘‘(8) TREATMENT
OF
FUND
TRANSFERS.—If, in connection 
with the transfer of the taxpayer’s interest in a nuclear power-
plant, the taxpayer transfers the Fund with respect to such 
powerplant to the transferee of such interest and the transferee 
elects to continue the application of this section to such Fund— 
‘‘(A) the transfer of such Fund shall not cause such 
Fund to be disqualified from the application of this section, 
and 
‘‘(B) no amount shall be treated as distributed from 
such Fund, or be includible in gross income, by reason 
of such transfer.’’. 
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H. R. 2488—170 
(c) TRANSFERS OF BALANCES IN NONQUALIFIED FUNDS.—Section 
468A is amended by redesignating subsections (f ) and (g) as sub-
sections (g) and (h), respectively, and by inserting after subsection 
(e) the following new subsection: 
‘‘(f ) TRANSFERS OF BALANCES IN NONQUALIFIED FUNDS INTO 
QUALIFIED FUNDS.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection (b), any tax-
payer maintaining a Fund to which this section applies with 
respect to a nuclear powerplant may transfer into such Fund 
amounts held in any nonqualified fund of such taxpayer with 
respect to such powerplant. 
‘‘(2) MAXIMUM AMOUNT PERMITTED TO BE TRANSFERRED.— 
The amount permitted to be transferred under paragraph (1) 
shall not exceed the balance in the nonqualified fund as of 
December 31, 1998. 
‘‘(3) DEDUCTION FOR AMOUNTS TRANSFERRED.— 
‘‘(A) IN GENERAL.—The deduction allowed by subsection 
(a) for any transfer permitted by this subsection shall be 
allowed ratably over the remaining estimated useful life 
(within the meaning of subsection (d)(2)(A)) of the nuclear 
powerplant, beginning with the later of the taxable year 
during which the transfer is made or the taxpayer’s first 
taxable year beginning after December 31, 2001. 
‘‘(B) DENIAL OF DEDUCTION FOR PREVIOUSLY DEDUCTED 
AMOUNTS.—No deduction shall be allowed for any transfer 
under this subsection of an amount for which a deduction 
was allowed when such amount was paid into the non-
qualified fund. For purposes of the preceding sentence, 
a ratable portion of each transfer shall be treated as being 
from previously deducted amounts to the extent thereof. 
‘‘(C) TRANSFERS OF QUALIFIED FUNDS.—If— 
‘‘(i) any transfer permitted by this subsection is 
made to any Fund to which this section applies, and 
‘‘(ii) such Fund is transferred thereafter, 
any deduction under this subsection for taxable years 
ending after the date that such Fund is transferred shall 
be allowed to the transferee and not to the transferor. 
The preceding sentence shall not apply if the transferor 
is an organization exempt from tax imposed by this chapter. 
‘‘(4) NEW RULING AMOUNT REQUIRED.—Paragraph (1) shall 
not apply to any transfer unless the taxpayer requests from 
the Secretary a new schedule of ruling amounts in connection 
with such transfer. 
‘‘(5) NONQUALIFIED FUND.—For purposes of this subsection, 
the term ‘nonqualified fund’ means, with respect to any nuclear 
powerplant, any fund in which amounts are irrevocably set 
aside pursuant to the requirements of any State or Federal 
agency exclusively for the purpose of funding the decommis-
sioning of such powerplant. 
‘‘(6) NO BASIS IN QUALIFIED FUNDS.—Notwithstanding any 
other provision of law, the basis of any Fund to which this 
section applies shall not be increased by reason of any transfer 
permitted by this subsection.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999. 
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H. R. 2488—171 
SEC. 1315. CONSOLIDATION OF LIFE INSURANCE COMPANIES WITH 
OTHER CORPORATIONS. 
(a) IN GENERAL.—Section 1504(b) (defining includible corpora-
tion) is amended by striking paragraph (2). 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (c) of section 1503 is amended by striking 
paragraph (2) (relating to losses of recent nonlife affiliates). 
(2) Section 1504 is amended by striking subsection (c) 
and by redesignating subsections (d), (e), and (f ) as subsections 
(c), (d), and (e), respectively. 
(3) Section 1503(c)(1) (relating to special rule for application 
of certain losses against income of insurance companies taxed 
under section 801) is amended by striking ‘‘an election under 
section 1504(c)(2) is in effect for the taxable year and’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2000. 
(2) LOSSES OF RECENT NONLIFE AFFILIATES.—The amend-
ment made by subsection (b)(1) shall apply to taxable years 
beginning after December 31, 2005. 
(d) NO CARRYBACK BEFORE JANUARY 1, 2006.—To the extent 
that a consolidated net operating loss is allowed or increased by 
reason of the amendments made by this section, such loss may 
not be carried back to a taxable year beginning before January 
1, 2006. 
(e) NONTERMINATION
OF GROUP.—No affiliated group shall 
terminate solely as a result of the amendments made by this 
section. 
(f ) WAIVER OF 5-YEAR WAITING PERIOD.—Under regulations 
prescribed by the Secretary of the Treasury or his delegate, an 
automatic waiver from the 5-year waiting period for reconsolidation 
provided in section 1504(a)(3) of the Internal Revenue Code of 
1986 shall be granted to any corporation which was previously 
an includible corporation but was subsequently deemed a noninclud-
ible corporation as a result of becoming a subsidiary of a corporation 
which was not an includible corporation solely by operation of 
section 1504(c)(2) of such Code (as in effect on the day before 
the date of the enactment of this Act). 
SEC. 1316. MODIFICATION OF ACTIVE BUSINESS DEFINITION UNDER 
SECTION 355. 
(a) IN GENERAL.—Section 355(b) (defining active conduct of 
a trade or business) is amended by adding at the end the following 
new paragraph: 
‘‘(3) SPECIAL RULES RELATING TO ACTIVE BUSINESS REQUIRE-
MENT.— 
‘‘(A) IN
GENERAL.—For purposes of determining 
whether a corporation meets the requirement of paragraph 
(2)(A), all members of such corporation’s separate affiliated 
group shall be treated as one corporation. For purposes 
of the preceding sentence, a corporation’s separate affiliated 
group is the affiliated group which would be determined 
under section 1504(a) if such corporation were the common 
parent and section 1504(b) did not apply. 
‘‘(B) CONTROL.—For purposes of paragraph (2)(D), all 
distributee corporations which are members of the same 
affiliated group (as defined in section 1504(a) without 
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