(B) Section 454(5) of such Act (42 U.S.C. 
654(5)) is amended by striking ‘‘(A) in any 
case’’ and all that follows through ‘‘(B)’’. 
(C) Section 466(a)(3)(B) of such Act (42 
U.S.C. 666(a)(3)(B)) is amended— 
(i) by striking ‘‘shall be distributed in 
accordance with section 457 in the case of 
overdue support assigned to a State pursu-
ant to section 408(a)(3) or 471(a)(17), or, 
in any other case,’’; and 
(ii) and inserting ‘‘or to the public 
agency responsible for supervising the 
placement of the child, which may use the 
payments in the manner the public agency 
determines will serve the best interest of 
the child’’ before the semicolon. 
(3) REPEAL OF CERTAIN DRA AMENDMENTS.— 
Effective on the date of enactment of this Act, sub-
sections (a) and (b) of section 7301 of the Deficit 
Reduction Act of 2005 (Public Law 109–171; 120 
Stat. 141) are repealed and parts A and D of title 
IV of the Social Security Act shall be applied as if 
the amendments made by such subsections had not 
been enacted. 
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(b) PROHIBITION
ON CONDITIONING RECEIPT
OF 
TANF ON ASSIGNMENT OF SUPPORT.—Section 408(a)(3) 
of the Social Security Act (42 U.S.C. 608(a)(3)) is amend-
ed— 
(1) in the paragraph heading, by striking ‘‘NO 
ASSISTANCE
FOR
FAMILIES
NOT’’ and inserting 
‘‘PROHIBITION ON CONDITIONING ASSISTANCE FOR 
FAMILIES ON’’; 
(2) by inserting ‘‘not’’ after ‘‘shall’’; 
(3) by inserting ‘‘or under a program funded 
with qualified State expenditures (as defined in sec-
tion 409(a)(7)(B)(i))’’ after ‘‘this part’’; and 
(4) by striking ‘‘, not exceeding the total 
amount of assistance so paid to the family,’’. 
(c) REQUIREMENT TO DISREGARD PERCENTAGE OF 
CHILD SUPPORT COLLECTED IN DETERMINING AMOUNT 
AND TYPE OF TANF ASSISTANCE.—Section 408(a) of the 
Social Security Act (42 U.S.C. 608(a)) is amended by add-
ing at the end the following new paragraph: 
‘‘(12) REQUIREMENT TO DISREGARD PERCENT-
AGE
OF
CHILD
SUPPORT
COLLECTED
IN
DETER-
MINING AMOUNT AND TYPE OF TANF ASSISTANCE.— 
A State to which a grant is made under section 403 
shall disregard at least the same percentage of 
amounts collected as support on behalf of a family 
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as the percentage of earned income that the State 
disregards, in determining the amount or type of as-
sistance provided to the family under the State pro-
gram funded under this part or under a program 
funded with qualified State expenditures (as defined 
in section 409(a)(7)(B)(i)).’’. 
(d) RESTORATION OF FEDERAL FUNDING.—Effec-
tive on the date of enactment of this Act, section 7309 
of the Deficit Reduction Act of 2005 (Public Law 109– 
171; 120 Stat. 147) is repealed and part D of title IV 
of the Social Security Act shall be applied as if the amend-
ment made by subsection (a) of that section had not been 
enacted. 
(e) REPEAL OF MANDATORY FEE FOR CHILD SUP-
PORT COLLECTION.—Effective on the date of enactment 
of this Act, section 7310 of the Deficit Reduction Act of 
2005 (Public Law 109–171; 120 Stat. 147) is repealed 
and part D of title IV of the Social Security Act shall 
be applied as if the amendments made by that section had 
not been enacted. 
(f) PROHIBITION ON CONSIDERING A PERIOD OF IN-
CARCERATION
VOLUNTARY
UNEMPLOYMENT.—Section 
466(a) of the Social Security Act (42 U.S.C. 666(a)) is 
amended by inserting after paragraph (19) the following: 
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‘‘(20) PROCEDURES RELATING TO PERIODS OF 
INCARCERATION OF NONCUSTODIAL PARENTS.— 
‘‘(A) IN GENERAL.—Procedures which re-
quire that, in determining or modifying the 
amount of, or terms and conditions of, any sup-
port obligation of a noncustodial parent, the 
State— 
‘‘(i) shall not consider any period of 
incarceration of such parent as a period of 
voluntary unemployment that disqualifies 
the parent from obtaining a modification 
of the support obligation consistent with 
the parent’s ability to pay child support; 
and 
‘‘(ii) subject to subparagraph (B) in 
the case of an incarcerated parent, may— 
‘‘(I) temporarily suspend any 
support obligation on the parent and 
the enforcement of any support obli-
gation of the parent existing prior to 
the period of incarceration; and 
‘‘(II) temporarily prohibit the ac-
crual of any interest on any support 
obligation of the parent existing prior 
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to the period of incarceration during 
any such period. 
‘‘(B) NOTICE AND OPPORTUNITY TO CHAL-
LENGE SUSPENSION.—Such procedures shall re-
quire the State to provide a custodial parent 
with— 
‘‘(i) notice of any suspension of re-
view, adjustment, or enforcement of a sup-
port obligation and of any prohibition on 
interest accrual on such obligation that is 
imposed in accordance with subparagraph 
(A)(ii); and 
‘‘(ii) an opportunity to request that 
the suspension or prohibition be termi-
nated or modified on the basis that the 
noncustodial parent has sufficient income 
or resources to continue payment of the 
support obligation during the noncustodial 
parent’s period of incarceration.’’. 
(g) REVIEW AND ADJUSTMENT OF CHILD SUPPORT 
ARREARAGES UPON REQUEST.—Section 466(a)(10) of 
the Social Security Act (42 U.S.C. 666(a)(10)) is amend-
ed by adding at the end the following: 
‘‘(D) REVIEW AND ADJUSTMENT OF AR-
REARAGES.—Procedures 
which 
require 
the 
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State to review, and if appropriate, reduce the 
balance of arrearages permanently assigned to 
the State under part A or E of this title, or 
under title XIX, pursuant to standards and 
procedures established by the State, in cases 
where the obligor lacks sufficient ability to pay 
the arrears, adjustment will promote timely 
payment of current support, or barriers, such 
as incarceration, may have limited the ability of 
the obligor to timely seek a modification of the 
order, and it is in the best interests of the child 
to make such reduction. Nothing in the pre-
ceding sentence shall be construed as affecting 
arrearages that have not been permanently as-
signed to the State under any such part or 
title.’’. 
(h) STUDY AND REPORT.—Not later than October 1, 
2012, the Secretary of Health and Human Services shall 
study and submit a report to Congress regarding the fol-
lowing: 
(1) The effect of age eligibility restrictions for 
the earned income tax credit established under sec-
tion 32 of the Internal Revenue Code of 1986 for in-
dividuals without qualifying children on— 
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(A) the ability of young parents to pay 
child support; 
(B) compliance with child support orders; 
and 
(C) the relationship between young non-
custodial parents and their children. 
(2) The impact of State earned income tax 
credit programs, especially such programs with tar-
geted benefits for noncustodial parents, on— 
(A) the ability of noncustodial parents to 
pay child support; 
(B) compliance with child support orders; 
and 
(C) the relationship between noncustodial 
parents and their children. 
(3) The challenges faced by legal immigrants 
and individuals for whom English is not their pri-
mary language in fulfilling child support and other 
noncustodial parenting obligations. 
(i) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this section, the amendments made by this 
section shall take effect on October 1, 2009, and 
shall apply to payments under parts A and D of title 
IV of the Social Security Act for calendar quarters 
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beginning on or after that date, and without regard 
to whether regulations to implement the amend-
ments are promulgated by such date. 
(2) STATE OPTION TO ACCELERATE EFFECTIVE 
DATE.—Notwithstanding paragraph (1), a State 
may elect to have the amendments made by the pre-
ceding provisions of this section apply to the State 
and to amounts collected by the State (and to pay-
ments under parts A and D of title IV of such Act), 
on and after such date as the State may select that 
is not later than September 30, 2009. 
SEC. 107. COLLECTION OF CHILD SUPPORT UNDER THE 
SUPPLEMENTAL 
NUTRITION 
ASSISTANCE 
PROGRAM. 
(a) ENCOURAGEMENT OF COLLECTION OF CHILD 
SUPPORT.—Section 5 of the Food and Nutrition Act of 
2008 (7 U.S.C. 2014) is amended— 
(1) in subsection (e)— 
(A) by redesignating paragraphs (5) and 
(6) as paragraphs (6) and (7), respectively; 
(B) in paragraph (4)(B), by striking 
‘‘paragraph (6)’’ and inserting ‘‘paragraph 
(7)’’; and 
(C) by inserting after paragraph (4) the 
following: 
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‘‘(5) DEDUCTION
FOR
CHILD
SUPPORT
RE-
CEIVED.— 
‘‘(A) IN GENERAL.—A household shall be 
allowed a deduction of 20 percent of all legally 
obligated child support payments received from 
an identified or putative parent of a child in the 
household if that parent is not a household 
member. 
‘‘(B) ORDER
OF
DETERMINING
DEDUC-
TIONS.—A deduction under this paragraph shall 
be determined before the computation of the ex-
cess shelter deduction under paragraph (7).’’; 
and 
(2) in subsection (k)(4)(B), by striking ‘‘sub-
section (e)(6)’’ and inserting ‘‘subsection (e)(7)’’; 
(b) SIMPLIFIED VERIFICATION OF CHILD SUPPORT 
PAYMENTS.—Section 5(n) of the Food and Nutrition Act 
of 2008 (7 U.S.C. 2014(n)) is amended— 
(1) in the subsection heading, by striking 
‘‘STATE
OPTIONS
TO
SIMPLIFY’’, and inserting 
‘‘SIMPLIFIED’’; and 
(2) by striking ‘‘Regardless of whether’’ and in-
serting the following: 
‘‘(1) IN GENERAL.—A household that is paying 
legally obligated child support through the program 
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under part D of title IV of the Social Security Act 
(42 U.S.C. 651 et seq.) shall receive— 
‘‘(A) a deduction under subsection (e)(4); 
or 
‘‘(B) an exclusion for paid child support 
under subsection (d)(3). 
‘‘(2) STATE OPTIONS.—Regardless of whether’’. 
(c) INCLUSION OF ECONOMIC OPPORTUNITIES PRO-
GRAMS
IN DEFINITION
OF WORK PROGRAM.—Section 
6(o)(2) of the Food and Nutrition Act of 2008 (7 U.S.C. 
2015(o)(2)) is amended— 
(1) in subparagraph (C), by striking ‘‘or’’ at 
the end; 
(2) in subparagraph (D), by striking the period 
at the end and inserting ‘‘; or’’; and 
(3) by adding at the end the following: 
‘‘(E) participate in and comply with the re-
quirements of a demonstration project under 
section 106 of the Julia Carson Responsible Fa-
therhood and Healthy Families Act of 2009;’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—This section and the amend-
ments made by this section take effect on October 
1, 2009. 
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(2) STATE OPTION.—A State may implement 
the amendments made by subsections (a) and (b) for 
participating households at the first recertification of 
the households that occurs on or after October 1, 
2009. 
SEC. 108. GRANTS SUPPORTING HEALTHY FAMILY PART-
NERSHIPS FOR DOMESTIC VIOLENCE INTER-
VENTION AND PREVENTIONS. 
Section 403(a) of the Social Security Act (42 U.S.C. 
603(a)) is amended by adding at the end the following 
new paragraph: 
‘‘(6) GRANTS
SUPPORTING
HEALTHY
FAMILY 
PARTNERSHIPS
FOR
DOMESTIC
VIOLENCE
INTER-
VENTION AND PREVENTION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
award grants on a competitive basis to healthy 
family partnerships to develop and implement 
promising practices for— 
‘‘(i) assessing and providing services 
to individuals and families affected by do-
mestic violence, including through case-
worker training, the provision of technical 
assistance to community partners, and the 
implementation of safe visitation and ex-
change programs; or 
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‘‘(ii) preventing domestic violence, 
particularly as a barrier to economic secu-
rity, and fostering healthy relationships. 
‘‘(B) EDUCATION SERVICES.—In awarding 
grants under subparagraph (A), the Secretary 
shall ensure that 10 percent of the funds made 
available under such grants are used for high 
schools and other secondary educational institu-
tions and institutions of higher education to 
provide education services on the value of 
healthy relationships, responsible parenting, 
and healthy marriages characterized by mutual 
respect and nonviolence, and the importance of 
building relationships skills such as communica-
tion, conflict resolution, and budgeting. 
‘‘(C) APPLICATION.—The respective entity 
and organization of a healthy family partner-
ship entered into for purposes of receiving a 
grant under this paragraph shall submit a joint 
application to the Secretary, at such time and 
in such manner as the Secretary shall specify, 
containing— 
‘‘(i) a description of how the partner-
ship intends to carry out the activities de-
scribed in subparagraph (A); 
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‘‘(ii) an assurance that funds made 
available under the grant shall be used to 
supplement, and not supplant, other funds 
used by the entity or organization to carry 
out programs, activities, or services de-
scribed in subparagraph (A) or (B); and 
‘‘(iii) such other information as the 
Secretary may require. 
‘‘(D) GENERAL RULES GOVERNING USE OF 
FUNDS.—The rules of section 404, other than 
subsection (b) of that section, shall not apply to 
a grant made under this paragraph. 
‘‘(E) DEFINITIONS.—In this paragraph: 
‘‘(i) DOMESTIC VIOLENCE.—The term 
‘domestic violence’ has the meaning given 
that term in section 402(a)(7)(B). 
‘‘(ii) HEALTHY
FAMILY
PARTNER-
SHIP.—The term ‘healthy family partner-
ship’ means a partnership between— 
‘‘(I) an entity receiving funds 
under a grant made under paragraph 
(2) to promote healthy marriage or re-
sponsible fatherhood; and 
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‘‘(II) an organization with dem-
onstrated expertise working with sur-
vivors of domestic violence. 
‘‘(F) APPROPRIATION.—Out of any money 
in the Treasury of the United States not other-
wise appropriated, there are appropriated for 
each of fiscal years 2011 through 2015, 
$25,000,000 for purposes of awarding grants to 
healthy family partnerships under this para-
graph.’’. 
SEC. 109. PROCEDURES TO ADDRESS DOMESTIC VIOLENCE. 
(a) IN GENERAL.—Section 403(a)(2) of the Social 
Security Act (42 U.S.C. 603(a)(2)) is amended— 
(1) by redesignating subparagraph (D) as sub-
paragraph (F); and 
(2) by inserting after subparagraph (C) the fol-
lowing: 
‘‘(D) REQUIREMENTS
FOR
RECEIPT
OF 
FUNDS.—An entity may not be awarded a grant 
under this paragraph unless the entity, as a 
condition of receiving funds under such a 
grant— 
‘‘(i) identifies in its application for the 
grant the domestic violence experts at the 
local, State, or national level with whom 
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the entity will consult in the development 
and implementation of the programs and 
activities of the entity; 
‘‘(ii) on award of the grant, and in 
consultation with such domestic violence 
experts, develops a written protocol which 
describes— 
‘‘(I) how the entity will identify 
instances or risks of domestic violence; 
‘‘(II) the procedures for respond-
ing to such instances or risk, includ-
ing making service referrals and pro-
viding protections and appropriate as-
sistance for identified individuals and 
families; 
‘‘(III) how confidentiality issues 
will be addressed; and 
‘‘(IV) the domestic violence train-
ing that will be provided to ensure ef-
fective and consistent implementation 
of the protocol; and 
‘‘(iii) in an annual report to the Sec-
retary, includes a description of the domes-
tic violence protocols, and a description of 
any implementation issues identified with 
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respect to domestic violence and how the 
issues were addressed. 
‘‘(E) DOMESTIC VIOLENCE DEFINED.—In 
this paragraph, the term ‘domestic violence’ has 
the meaning given that term in section 
402(a)(7)(B).’’. 
(b) CONFORMING AMENDMENTS.—Section 403(a)(2) 
of such Act (42 U.S.C. 603(a)(2)), as amended by section 
103(d) of this Act and subsection (a)(1) of this section, 
is amended— 
(1) in subparagraph (A)(i)— 
(A) by striking ‘‘(B) and (C)’’ and insert-
ing ‘‘(B), (C), and (D)’’; and 
(B) by striking ‘‘subparagraph (D)’’ and 
inserting ‘‘subparagraph (F)’’; 
(2) in subparagraphs (B)(i) and (C)(i), by 
striking ‘‘(D)’’ each place it appears and inserting 
‘‘(F)’’; and 
(3) in subparagraph (F) (as so redesignated by 
subsection (a)(1) of this section), by striking 
‘‘$150,000,000 for each of fiscal years 2011 through 
2015’’ and inserting ‘‘$150,000,000 for each of fis-
cal years 2011 and 2012 and $200,000,000 for each 
of fiscal years 2013 through 2015’’. 
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TITLE II—REVENUE PROVISIONS 
SEC. 201. INCREASE IN CREDIT PERCENTAGE UNDER 
EARNED INCOME TAX CREDIT FOR ELIGIBLE 
INDIVIDUALS WITH NO QUALIFYING CHIL-
DREN. 
(a) IN GENERAL.—The row in the table in subpara-
graph (A) of section 32(b)(1) of the Internal Revenue 
Code of 1986 relating to no qualifying children is amended 
to read as follows: 
‘‘No qualifying children ..........................................
7.65’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2009. 
SEC. 202. BROKER REPORTING OF CUSTOMER’S BASIS IN 
SECURITIES TRANSACTIONS. 
(a) IN GENERAL.—Section 6045 of the Internal Rev-
enue Code of 1986 (relating to returns of brokers) is 
amended to read as follows: 
‘‘(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 any applicable security, the broker shall 
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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 an applicable security of 
a customer shall include for each reported ap-
plicable security the customer’s adjusted basis 
in such security. 
‘‘(B) EXEMPTION FROM REQUIREMENT.— 
The Secretary shall issue such regulations or 
guidance as necessary concerning the applica-
tion of the requirement under subparagraph (A) 
in cases in which a broker in making a return 
does not have sufficient information to meet 
such requirement with respect to the reported 
applicable security. Such regulations or guid-
ance may— 
‘‘(i) require such other information re-
lated to such adjusted basis as the Sec-
retary may prescribe, and 
‘‘(ii) exempt classes of cases in which 
the broker does not have sufficient infor-
mation to meet either the requirement 
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under subparagraph (A) or the require-
ment under clause (i). 
‘‘(3) INFORMATION TRANSFERS.—To the extent 
provided in regulations, there shall be such ex-
changes of information between brokers as such reg-
ulations may require for purposes of enabling such 
brokers to meet the requirements of this subsection. 
‘‘(4) DEFINITIONS.—For purposes of this sub-
section, the term ‘applicable security’ means any— 
‘‘(A) security described in subparagraph 
(A) or (C) of section 475(c)(2), 
‘‘(B) interest in a regulated investment 
company (as defined in section 851), or 
‘‘(C) other financial instrument designated 
in regulations prescribed by the Secretary.’’. 
(b) CONFORMING AMENDMENT.—Section 6045(h)(4) 
of such Code is amended by inserting ‘‘(as in effect on 
the date of the enactment of the Julia Carson Responsible 
Fatherhood and Healthy Families Act of 2009)’’ after 
‘‘subsection (g)(3)’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to returns the due date for which 
(determined without regard to extensions) is after Decem-
ber 31, 2009, with respect to securities acquired after De-
cember 31, 2008. 
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SEC. 203. MODIFICATION OF EFFECTIVE DATE OF LEASING 
PROVISIONS OF THE AMERICAN JOBS CRE-
ATION ACT OF 2004. 
(a) LEASES TO FOREIGN ENTITIES.—Section 849(b) 
of the American Jobs Creation Act of 2004 is amended 
by adding at the end the following new paragraph: 
‘‘(5) LEASES TO FOREIGN ENTITIES.—In the 
case of tax-exempt use property leased to a tax-ex-
empt entity which is a foreign person or entity, the 
amendments made by this part shall apply to taxable 
years beginning after December 31, 2006, with re-
spect to leases entered into on or before March 12, 
2004.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect as if included in the enact-
ment of the American Jobs Creation Act of 2004. 
SEC. 204. CLARIFICATION OF ECONOMIC SUBSTANCE DOC-
TRINE. 
(a) IN GENERAL.—Section 7701 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(o) as subsection (p) and by inserting after subsection (n) 
the following new subsection: 
‘‘(o) CLARIFICATION
OF
ECONOMIC
SUBSTANCE 
DOCTRINE; ETC.— 
‘‘(1) GENERAL RULES.— 
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‘‘(A) IN GENERAL.—In any case in which 
a court determines that the economic substance 
doctrine is relevant for purposes of this title to 
a transaction (or series of transactions), such 
transaction (or series of transactions) shall have 
economic substance only if the requirements of 
this paragraph are met. 
‘‘(B) DEFINITION
OF
ECONOMIC
SUB-
STANCE.—For purposes of subparagraph (A)— 
‘‘(i) IN GENERAL.—A transaction has 
economic substance only if— 
‘‘(I) the transaction changes in a 
meaningful way (apart from Federal 
tax effects) the taxpayer’s economic 
position, and 
‘‘(II) the taxpayer has a substan-
tial nontax purpose for entering into 
such transaction and the transaction 
is a reasonable means of accom-
plishing such purpose. 
In applying subclause (II), a purpose of 
achieving a financial accounting benefit 
shall not be taken into account in deter-
mining whether a transaction has a sub-
stantial nontax purpose if the origin of 
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such financial accounting benefit is a re-
duction of income tax. 
‘‘(ii) SPECIAL
RULE
WHERE
TAX-
PAYER RELIES ON PROFIT POTENTIAL.—A 
transaction shall not be treated as having 
economic substance by reason of having a 
potential for profit unless— 
‘‘(I) the present value of the rea-
sonably expected pre-tax profit from 
the transaction is substantial in rela-
tion to the present value of the ex-
pected net tax benefits that would be 
allowed if the transaction were re-
spected, and 
‘‘(II) the reasonably expected 
pre-tax profit from the transaction ex-
ceeds a risk-free rate of return. 
‘‘(C) TREATMENT OF FEES AND FOREIGN 
TAXES.—Fees and other transaction expenses 
and foreign taxes shall be taken into account as 
expenses in determining pre-tax profit under 
subparagraph (B)(ii). 
‘‘(2) SPECIAL RULES FOR TRANSACTIONS WITH 
TAX-INDIFFERENT PARTIES.— 
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‘‘(A) SPECIAL
RULES
FOR
FINANCING 
TRANSACTIONS.—The form of a transaction 
which is in substance the borrowing of money 
or the acquisition of financial capital directly or 
indirectly from a tax-indifferent party shall not 
be respected if the present value of the deduc-
tions to be claimed with respect to the trans-
action is substantially in excess of the present 
value of the anticipated economic returns of the 
person lending the money or providing the fi-
nancial capital. A public offering shall be treat-
ed as a borrowing, or an acquisition of financial 
capital, from a tax-indifferent party if it is rea-
sonably expected that at least 50 percent of the 
offering will be placed with tax-indifferent par-
ties. 
‘‘(B) ARTIFICIAL INCOME SHIFTING AND 
BASIS
ADJUSTMENTS.—The form of a trans-
action with a tax-indifferent party shall not be 
respected if— 
‘‘(i) it results in an allocation of in-
come or gain to the tax-indifferent party in 
excess of such party’s economic income or 
gain, or 
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‘‘(ii) it results in a basis adjustment 
or shifting of basis on account of over-
stating the income or gain of the tax-indif-
ferent party. 
‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
‘‘(A) ECONOMIC SUBSTANCE DOCTRINE.— 
The term ‘economic substance doctrine’ means 
the common law doctrine under which tax bene-
fits under subtitle A with respect to a trans-
action are not allowable if the transaction does 
not have economic substance or lacks a business 
purpose. 
‘‘(B) 
TAX-INDIFFERENT
PARTY.—The 
term ‘tax-indifferent party’ means any person 
or entity not subject to tax imposed by subtitle 
A. A person shall be treated as a tax-indifferent 
party with respect to a transaction if the items 
taken into account with respect to the trans-
action have no substantial impact on such per-
son’s liability under subtitle A. 
‘‘(C) EXCEPTION FOR PERSONAL TRANS-
ACTIONS OF INDIVIDUALS.—In the case of an 
individual, this subsection shall apply only to 
transactions entered into in connection with a 
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trade or business or an activity engaged in for 
the production of income. 
‘‘(D) TREATMENT OF LESSORS.—In apply-
ing paragraph (1)(B)(ii) to the lessor of tan-
gible property subject to a lease— 
‘‘(i) the expected net tax benefits with 
respect to the leased property shall not in-
clude the benefits of— 
‘‘(I) depreciation, 
‘‘(II) any tax credit, or 
‘‘(III) any other deduction as 
provided in guidance by the Secretary, 
and 
‘‘(ii) subclause (II) of paragraph 
(1)(B)(ii) shall be disregarded in deter-
mining whether any of such benefits are al-
lowable. 
‘‘(4) OTHER COMMON LAW DOCTRINES NOT AF-
FECTED.—Except as specifically provided in this 
subsection, the provisions of this subsection shall not 
be construed as altering or supplanting any other 
rule of law, and the requirements of this subsection 
shall be construed as being in addition to any such 
other rule of law. 
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‘‘(5) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section. Such regulations may include exemptions 
from the application of this subsection.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transactions entered into after 
the date of the enactment of this Act. 
Æ 
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