H. R. 1424—88 
SEC. 402. ELIMINATION OF THE DIFFERENT TREATMENT OF FOREIGN 
OIL AND GAS EXTRACTION INCOME AND FOREIGN OIL 
RELATED INCOME FOR PURPOSES OF THE FOREIGN TAX 
CREDIT. 
(a) IN GENERAL.—Subsections (a) and (b) of section 907 (relating 
to special rules in case of foreign oil and gas income) are amended 
to read as follows: 
‘‘(a) REDUCTION IN AMOUNT ALLOWED AS FOREIGN TAX UNDER 
SECTION 901.—In applying section 901, the amount of any foreign 
oil and gas taxes paid or accrued (or deemed to have been paid) 
during the taxable year which would (but for this subsection) be 
taken into account for purposes of section 901 shall be reduced 
by the amount (if any) by which the amount of such taxes exceeds 
the product of— 
‘‘(1) the amount of the combined foreign oil and gas income 
for the taxable year, 
‘‘(2) multiplied by— 
‘‘(A) in the case of a corporation, the percentage which 
is equal to the highest rate of tax specified under section 
11(b), or 
‘‘(B) in the case of an individual, a fraction the numer-
ator of which is the tax against which the credit under 
section 901(a) is taken and the denominator of which is 
the taxpayer’s entire taxable income. 
‘‘(b) COMBINED FOREIGN OIL AND GAS INCOME; FOREIGN OIL 
AND GAS TAXES.—For purposes of this section— 
‘‘(1) COMBINED FOREIGN OIL AND GAS INCOME.—The term 
‘combined foreign oil and gas income’ means, with respect to 
any taxable year, the sum of— 
‘‘(A) foreign oil and gas extraction income, and 
‘‘(B) foreign oil related income. 
‘‘(2) FOREIGN OIL AND GAS TAXES.—The term ‘foreign oil 
and gas taxes’ means, with respect to any taxable year, the 
sum of— 
‘‘(A) oil and gas extraction taxes, and 
‘‘(B) any income, war profits, and excess profits taxes 
paid or accrued (or deemed to have been paid or accrued 
under section 902 or 960) during the taxable year with 
respect to foreign oil related income (determined without 
regard to subsection (c)(4)) or loss which would be taken 
into account for purposes of section 901 without regard 
to this section.’’. 
(b) RECAPTURE OF FOREIGN OIL AND GAS LOSSES.—Paragraph 
(4) of section 907(c) (relating to recapture of foreign oil and gas 
extraction losses by recharacterizing later extraction income) is 
amended to read as follows: 
‘‘(4) RECAPTURE OF FOREIGN OIL AND GAS LOSSES BY RE-
CHARACTERIZING
LATER
COMBINED
FOREIGN
OIL
AND
GAS 
INCOME.— 
‘‘(A) IN GENERAL.—The combined foreign oil and gas 
income of a taxpayer for a taxable year (determined without 
regard to this paragraph) shall be reduced— 
‘‘(i) first by the amount determined under subpara-
graph (B), and 
‘‘(ii) then by the amount determined under 
subparagraph (C).
H. R. 1424—89 
The aggregate amount of such reductions shall be treated 
as income (from sources without the United States) which 
is not combined foreign oil and gas income. 
‘‘(B) REDUCTION FOR PRE-2009 FOREIGN OIL EXTRACTION 
LOSSES.—The reduction under this paragraph shall be 
equal to the lesser of— 
‘‘(i) the foreign oil and gas extraction income of 
the taxpayer for the taxable year (determined without 
regard to this paragraph), or 
‘‘(ii) the excess of— 
‘‘(I) the aggregate amount of foreign oil extrac-
tion losses for preceding taxable years beginning 
after December 31, 1982, and before January 1, 
2009, over 
‘‘(II) so much of such aggregate amount as 
was recharacterized under this paragraph (as in 
effect before and after the date of the enactment 
of the Energy Improvement and Extension Act 
of 2008) for preceding taxable years beginning 
after December 31, 1982. 
‘‘(C) REDUCTION FOR POST-2008 FOREIGN OIL AND GAS 
LOSSES.—The reduction under this paragraph shall be 
equal to the lesser of— 
‘‘(i) the combined foreign oil and gas income of 
the taxpayer for the taxable year (determined without 
regard to this paragraph), reduced by an amount equal 
to the reduction under subparagraph (A) for the taxable 
year, or 
‘‘(ii) the excess of— 
‘‘(I) the aggregate amount of foreign oil and 
gas losses for preceding taxable years beginning 
after December 31, 2008, over 
‘‘(II) so much of such aggregate amount as 
was recharacterized under this paragraph for pre-
ceding taxable years beginning after December 31, 
2008. 
‘‘(D) FOREIGN OIL AND GAS LOSS DEFINED.— 
‘‘(i) IN GENERAL.—For purposes of this paragraph, 
the term ‘foreign oil and gas loss’ means the amount 
by which— 
‘‘(I) the gross income for the taxable year from 
sources without the United States and its posses-
sions (whether or not the taxpayer chooses the 
benefits of this subpart for such taxable year) 
taken into account in determining the combined 
foreign oil and gas income for such year, is 
exceeded by 
‘‘(II) the sum of the deductions properly appor-
tioned or allocated thereto. 
‘‘(ii) NET OPERATING LOSS DEDUCTION NOT TAKEN 
INTO
ACCOUNT.—For purposes of clause (i), the net 
operating loss deduction allowable for the taxable year 
under section 172(a) shall not be taken into account. 
‘‘(iii) EXPROPRIATION
AND
CASUALTY
LOSSES
NOT 
TAKEN INTO ACCOUNT.—For purposes of clause (i), there 
shall not be taken into account—
H. R. 1424—90 
‘‘(I) any foreign expropriation loss (as defined 
in section 172(h) (as in effect on the day before 
the date of the enactment of the Revenue Reconcili-
ation Act of 1990)) for the taxable year, or 
‘‘(II) any loss for the taxable year which arises 
from fire, storm, shipwreck, or other casualty, or 
from theft, 
to the extent such loss is not compensated for by insur-
ance or otherwise. 
‘‘(iv) FOREIGN OIL EXTRACTION LOSS.—For purposes 
of subparagraph (B)(ii)(I), foreign oil extraction losses 
shall be determined under this paragraph as in effect 
on the day before the date of the enactment of the 
Energy Improvement and Extension Act of 2008.’’. 
(c) CARRYBACK
AND CARRYOVER
OF DISALLOWED CREDITS.— 
Section 907(f) (relating to carryback and carryover of disallowed 
credits) is amended— 
(1) by striking ‘‘oil and gas extraction taxes’’ each place 
it appears and inserting ‘‘foreign oil and gas taxes’’, and 
(2) by adding at the end the following new paragraph: 
‘‘(4) TRANSITION RULES FOR PRE-2009 AND 2009 DISALLOWED 
CREDITS.— 
‘‘(A) PRE-2009
CREDITS.—In the case of any unused 
credit year beginning before January 1, 2009, this sub-
section shall be applied to any unused oil and gas extraction 
taxes carried from such unused credit year to a year begin-
ning after December 31, 2008— 
‘‘(i) by substituting ‘oil and gas extraction taxes’ 
for ‘foreign oil and gas taxes’ each place it appears 
in paragraphs (1), (2), and (3), and 
‘‘(ii) by computing, for purposes of paragraph 
(2)(A), the limitation under subparagraph (A) for the 
year to which such taxes are carried by substituting 
‘foreign oil and gas extraction income’ for ‘foreign oil 
and gas income’ in subsection (a). 
‘‘(B) 2009 CREDITS.—In the case of any unused credit 
year beginning in 2009, the amendments made to this 
subsection by the Energy Improvement and Extension Act 
of 2008 shall be treated as being in effect for any preceding 
year beginning before January 1, 2009, solely for purposes 
of determining how much of the unused foreign oil and 
gas taxes for such unused credit year may be deemed 
paid or accrued in such preceding year.’’. 
(d) CONFORMING AMENDMENT.—Section 6501(i) is amended by 
striking ‘‘oil and gas extraction taxes’’ and inserting ‘‘foreign oil 
and gas taxes’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2008. 
SEC. 403. BROKER REPORTING OF CUSTOMER’S BASIS IN SECURITIES 
TRANSACTIONS. 
(a) IN GENERAL.— 
(1) BROKER REPORTING FOR SECURITIES TRANSACTIONS.— 
Section 6045 is amended by adding at the end the following 
new subsection: 
‘‘(g) ADDITIONAL INFORMATION REQUIRED IN THE CASE OF SECU-
RITIES TRANSACTIONS, ETC.—
H. R. 1424—91 
‘‘(1) IN
GENERAL.—If a broker is otherwise required 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 required under 
paragraph (1) to be shown on a return with respect to 
a covered security of a customer shall include the cus-
tomer’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 pur-
poses of subparagraph (A)— 
‘‘(i) IN GENERAL.—The customer’s adjusted basis 
shall be determined— 
‘‘(I) in the case of any security (other than 
any stock for which an average basis method is 
permissible under section 1012), in accordance 
with the first-in first-out method unless the cus-
tomer notifies the broker by means of making an 
adequate identification of the stock sold or trans-
ferred, and 
‘‘(II) in the case of any stock for which an 
average basis method is permissible under section 
1012, 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 stock is held. 
‘‘(ii) EXCEPTION FOR WASH SALES.—Except as other-
wise provided by the Secretary, 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 security’ means 
any specified security acquired on or after the applicable 
date if such security— 
‘‘(i) was acquired through a transaction in the 
account in which such security 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 sec-
tion 6045A with respect to the transfer. 
‘‘(B) SPECIFIED SECURITY.—The term ‘specified security’ 
means— 
‘‘(i) any share of stock in a corporation, 
‘‘(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 pur-
poses of this subsection, and
H. R. 1424—92 
‘‘(iv) any other financial instrument with respect 
to which the Secretary determines that adjusted basis 
reporting is appropriate for purposes of this subsection. 
‘‘(C) APPLICABLE
DATE.—The term ‘applicable date’ 
means— 
‘‘(i) January 1, 2011, in the case of any specified 
security which is stock in a corporation (other than 
any stock described in clause (ii)), 
‘‘(ii) January 1, 2012, in the case of any stock 
for which an average basis method is permissible under 
section 1012, and 
‘‘(iii) January 1, 2013, or such later date deter-
mined by the Secretary in the case of any other speci-
fied security. 
‘‘(4) TREATMENT OF S CORPORATIONS.—In the case of the 
sale of a covered security acquired by an S corporation (other 
than a financial institution) after December 31, 2011, such 
S corporation shall be treated in the same manner as a partner-
ship for purposes of this section. 
‘‘(5) SPECIAL RULES FOR SHORT SALES.—In the case of a 
short sale, reporting under this section shall be made for the 
year in which such sale is closed.’’. 
(2) BROKER
INFORMATION
REQUIRED
WITH
RESPECT
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 SECURITIES.— 
‘‘(1) EXERCISE OF OPTION.—For purposes of this section, 
if a covered security is acquired or disposed of pursuant to 
the exercise of an option that was granted or acquired in 
the same account as the covered security, the amount received 
with respect to the grant or paid with respect to the acquisition 
of such option shall be treated as an adjustment to gross 
proceeds or as an adjustment to basis, as the case may be. 
‘‘(2) LAPSE OR CLOSING TRANSACTION.—In the case of the 
lapse 
(or 
closing 
transaction 
(as 
defined 
in 
section 
1234(b)(2)(A))) of an option on a specified security or the exer-
cise of a cash-settled option on a specified security, reporting 
under subsections (a) and (g) with respect to such option shall 
be made for the calendar year which includes the date of 
such lapse, closing transaction, or exercise. 
‘‘(3) PROSPECTIVE
APPLICATION.—Paragraphs (1) and (2) 
shall not apply to any option which is granted or acquired 
before January 1, 2013. 
‘‘(4) DEFINITIONS.—For purposes of this subsection, the 
terms ‘covered security’ and ‘specified security’ shall have the 
meanings given such terms in subsection (g)(3).’’. 
(3) EXTENSION OF PERIOD FOR STATEMENTS SENT TO CUS-
TOMERS.— 
(A) IN
GENERAL.—Subsection (b) of section 6045 is 
amended by striking ‘‘January 31’’ and inserting ‘‘February 
15’’. 
(B) STATEMENTS RELATED TO SUBSTITUTE 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
H. R. 1424—93 
February 15 of the year following the calendar year 
in which the 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 customer, any statement 
which would otherwise be required to be furnished on 
or before January 31 of a calendar year with respect to 
any item reportable to the taxpayer shall instead be 
required to be furnished on or before February 15 of such 
calendar year if furnished with such consolidated reporting 
statement.’’. 
(b) DETERMINATION
OF
BASIS
OF
CERTAIN
SECURITIES
ON 
ACCOUNT BY ACCOUNT OR AVERAGE BASIS METHOD.—Section 1012 
is amended— 
(1) by striking ‘‘The basis of property’’ and inserting 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 ESTATE TAXES.— 
The cost of real property’’, and 
(3) by adding at the end the following new subsections: 
‘‘(c) DETERMINATIONS BY ACCOUNT.— 
‘‘(1) IN GENERAL.—In the case of the sale, exchange, or 
other disposition of a specified security on or after the applicable 
date, the conventions prescribed by regulations under this sec-
tion shall be applied on an account by account basis. 
‘‘(2) APPLICATION TO CERTAIN FUNDS.— 
‘‘(A) IN GENERAL.—Except as provided in subparagraph 
(B), any stock for which an average basis method is permis-
sible under section 1012 which is acquired before January 
1, 2012, shall be treated as a separate account from any 
such stock acquired on or after such date. 
‘‘(B) ELECTION
FUND
FOR
TREATMENT
AS
SINGLE 
ACCOUNT.—If a fund described in subparagraph (A) elects 
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. 
A rule similar to the rule of the preceding sentence shall 
apply with respect to a broker holding such stock as a 
nominee. 
‘‘(3) DEFINITIONS.—For purposes of this section, the terms 
‘specified security’ and ‘applicable date’ shall have the meaning 
given such terms in section 6045(g). 
‘‘(d) AVERAGE BASIS FOR STOCK ACQUIRED PURSUANT TO A DIVI-
DEND REINVESTMENT PLAN.— 
‘‘(1) IN GENERAL.—In the case of any stock acquired after 
December 31, 2010, in connection with a dividend reinvestment 
plan, the basis of such stock while held as part of such plan
H. R. 1424—94 
shall be determined using one of the methods which may be 
used for determining the basis of stock in an open-end fund. 
‘‘(2) TREATMENT
AFTER
TRANSFER.—In the case of the 
transfer to another account of stock to which paragraph (1) 
applies, such stock shall have a cost basis in such other account 
equal to its basis in the dividend reinvestment plan imme-
diately before such transfer (properly adjusted for any fees 
or other charges taken into account in connection with such 
transfer). 
‘‘(3) SEPARATE
ACCOUNTS; ELECTION
FOR
TREATMENT
AS 
SINGLE ACCOUNT.—Rules similar to the rules of subsection (c)(2) 
shall apply for purposes of this subsection. 
‘‘(4) DIVIDEND REINVESTMENT PLAN.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The term ‘dividend reinvestment 
plan’ means any arrangement under which dividends on 
any stock are reinvested in stock identical to the stock 
with respect to which the dividends are paid. 
‘‘(B) INITIAL STOCK ACQUISITION TREATED AS ACQUIRED 
IN
CONNECTION
WITH
PLAN.—Stock shall be treated as 
acquired in connection with a dividend reinvestment plan 
if such stock is acquired pursuant to such plan or if the 
dividends paid on such stock are subject to such plan.’’. 
(c) INFORMATION BY TRANSFERORS TO AID BROKERS.— 
(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 TRANS-
FERS OF COVERED SECURITIES TO BROKERS. 
‘‘(a) FURNISHING
OF INFORMATION.—Every applicable person 
which transfers to a broker (as defined in section 6045(c)(1)) a 
security which is a covered security (as defined in section 6045(g)(3)) 
in the hands of such applicable person shall furnish to such broker 
a written statement in such manner and setting forth such informa-
tion as the Secretary may by regulations prescribe for purposes 
of enabling such broker to meet the requirements of section 6045(g). 
‘‘(b) APPLICABLE PERSON.—For purposes of subsection (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 Secretary in 
regulations. 
‘‘(c) TIME FOR FURNISHING STATEMENT.—Except as otherwise 
provided by the Secretary, any statement required by subsection 
(a) shall be furnished not later than 15 days after the date of 
the transfer described in such subsection.’’. 
(2) ASSESSABLE
PENALTIES.—Paragraph (2) of section 
6724(d), as amended by the Housing Assistance Tax Act of 
2008, is amended by redesignating subparagraphs (I) through 
(DD) as subparagraphs (J) through (EE), respectively, and by 
inserting after subparagraph (H) the following new subpara-
graph: 
‘‘(I) section 6045A (relating to information required 
in connection with transfers of covered securities to bro-
kers),’’. 
(3) CLERICAL AMENDMENT.—The table of sections for sub-
part B of part III of subchapter A of chapter 61 is amended
H. R. 1424—95 
by inserting after the item relating to section 6045 the following 
new item: 
‘‘Sec. 6045A. Information required in connection with transfers of covered securities 
to brokers.’’. 
(d) ADDITIONAL ISSUER INFORMATION TO AID BROKERS.— 
(1) IN GENERAL.—Subpart B of part III of subchapter A 
of chapter 61, as amended by subsection (b), is amended by 
inserting after section 6045A the following new section: 
‘‘SEC. 6045B. RETURNS RELATING TO ACTIONS AFFECTING BASIS OF 
SPECIFIED SECURITIES. 
‘‘(a) IN GENERAL.—According to the forms or regulations pre-
scribed by the Secretary, any issuer of a specified 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 required by sub-
section (a) shall be filed not later than the earlier of— 
‘‘(1) 45 days after the date of the action described in sub-
section (a), or 
‘‘(2) January 15 of the year following the calendar year 
during which such action occurred. 
‘‘(c) STATEMENTS TO BE FURNISHED TO HOLDERS OF SPECIFIED 
SECURITIES OR THEIR NOMINEES.—According to the forms or regula-
tions prescribed by the Secretary, every person required to make 
a return under subsection (a) with respect to a specified security 
shall furnish to the nominee with respect to the specified security 
(or certificate holder if there is no nominee) a written statement 
showing— 
‘‘(1) the name, address, and phone number of the informa-
tion 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 sentence shall 
be furnished to the holder on or before January 15 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 described in subsection (a) with respect to a 
specified security 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 person required to make 
the return under subsection (a) makes publicly available, in such 
form and manner as the 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).’’.
H. R. 1424—96 
(2) ASSESSABLE PENALTIES.— 
(A) Subparagraph (B) of section 6724(d)(1), as amended 
by the Housing Assistance Tax Act of 2008, is amended 
by redesignating clause (iv) and each of the clauses which 
follow as clauses (v) through (xxiii), respectively, and by 
inserting after clause (iii) the following new clause: 
‘‘(iv) section 6045B(a) (relating to returns relating 
to actions affecting basis of specified securities),’’. 
(B) Paragraph (2) of section 6724(d), as amended by 
the Housing Assistance Tax Act of 2008 and by subsection 
(c)(2), is amended by redesignating subparagraphs (J) 
through (EE) as subparagraphs (K) through (FF), respec-
tively, and by inserting after subparagraph (I) the following 
new subparagraph: 
‘‘(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 sections for sub-
part B of part III of subchapter A of chapter 61, as amended 
by subsection (b)(3), is amended by inserting after the item 
relating to section 6045A the following new item: 
‘‘Sec. 6045B. Returns relating to actions affecting basis of specified securities.’’. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, the amendments made by this section shall take effect 
on January 1, 2011. 
(2) EXTENSION OF PERIOD FOR STATEMENTS SENT TO CUS-
TOMERS.—The amendments made by subsection (a)(3) shall 
apply to statements required to be furnished after December 
31, 2008. 
SEC. 404. 0.2 PERCENT FUTA SURTAX. 
(a) IN GENERAL.—Section 3301 (relating to rate of tax) is 
amended— 
(1) by striking ‘‘through 2008’’ in paragraph (1) and 
inserting ‘‘through 2009’’, and 
(2) by striking ‘‘calendar year 2009’’ in paragraph (2) and 
inserting ‘‘calendar year 2010’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to wages paid after December 31, 2008. 
SEC. 405. INCREASE AND EXTENSION OF OIL SPILL LIABILITY TRUST 
FUND TAX. 
(a) INCREASE IN RATE.— 
(1) IN GENERAL.—Section 4611(c)(2)(B) (relating to rates) 
is amended by striking ‘‘is 5 cents a barrel.’’ and inserting 
‘‘is— 
‘‘(i) in the case of crude oil received or petroleum 
products entered before January 1, 2017, 8 cents a 
barrel, and 
‘‘(ii) in the case of crude oil received or petroleum 
products entered after December 31, 2016, 9 cents 
a barrel.’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply on and after the first day of the first calendar 
quarter beginning more than 60 days after the date of the 
enactment of this Act.
H. R. 1424—97 
(b) EXTENSION.— 
(1) IN GENERAL.—Section 4611(f) (relating to application 
of Oil Spill Liability Trust Fund financing rate) is amended 
by striking paragraphs (2) and (3) and inserting the following 
new paragraph: 
‘‘(2) TERMINATION.—The Oil Spill Liability Trust Fund 
financing rate shall not apply after December 31, 2017.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
4611(f)(1) 
is 
amended by striking ‘‘paragraphs (2) and (3)’’ and inserting 
‘‘paragraph (2)’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall take effect on the date of the enactment of this 
Act. 
DIVISION C—TAX EXTENDERS AND 
ALTERNATIVE MINIMUM TAX RELIEF 
SEC. 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CON-
TENTS. 
(a) SHORT TITLE.—This division may be cited as the ‘‘Tax 
Extenders and Alternative Minimum Tax Relief Act of 2008’’. 
(b) AMENDMENT OF 1986 CODE.—Except as otherwise expressly 
provided, whenever in this division an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section 
or other provision, the reference shall be considered to be made 
to a section or other provision of the Internal Revenue Code of 
1986. 
(c) TABLE OF CONTENTS.—The table of contents of this division 
is as follows: 
Sec. 1. Short title; amendment of 1986 Code; table of contents. 
TITLE I—ALTERNATIVE MINIMUM TAX RELIEF 
Sec. 101. Extension of alternative minimum tax relief for nonrefundable personal 
credits. 
Sec. 102. Extension of increased alternative minimum tax exemption amount. 
Sec. 103. Increase of AMT refundable credit amount for individuals with long-term 
unused credits for prior year minimum tax liability, etc. 
TITLE II—EXTENSION OF INDIVIDUAL TAX PROVISIONS 
Sec. 201. Deduction for State and local sales taxes. 
Sec. 202. Deduction of qualified tuition and related expenses. 
Sec. 203. Deduction for certain expenses of elementary and secondary school teach-
ers. 
Sec. 204. Additional standard deduction for real property taxes for nonitemizers. 
Sec. 205. Tax-free distributions from individual retirement plans for charitable pur-
poses. 
Sec. 206. Treatment of certain dividends of regulated investment companies. 
Sec. 207. Stock in RIC for purposes of determining estates of nonresidents not citi-
zens. 
Sec. 208. Qualified investment entities. 
TITLE III—EXTENSION OF BUSINESS TAX PROVISIONS 
Sec. 301. Extension and modification of research credit. 
Sec. 302. New markets tax credit. 
Sec. 303. Subpart F exception for active financing income. 
Sec. 304. Extension of look-thru rule for related controlled foreign corporations. 
Sec. 305. Extension of 15-year straight-line cost recovery for qualified leasehold im-
provements and qualified restaurant improvements; 15-year straight- 
line cost recovery for certain improvements to retail space. 
Sec. 306. Modification of tax treatment of certain payments to controlling exempt 
organizations.
H. R. 1424—98 
Sec. 307. Basis adjustment to stock of S corporations making charitable contribu-
tions of property. 
Sec. 308. Increase in limit on cover over of rum excise tax to Puerto Rico and the 
Virgin Islands. 
Sec. 309. Extension of economic development credit for American Samoa. 
Sec. 310. Extension of mine rescue team training credit. 
Sec. 311. Extension of election to expense advanced mine safety equipment. 
Sec. 312. Deduction allowable with respect to income attributable to domestic pro-
duction activities in Puerto Rico. 
Sec. 313. Qualified zone academy bonds. 
Sec. 314. Indian employment credit. 
Sec. 315. Accelerated depreciation for business property on Indian reservations. 
Sec. 316. Railroad track maintenance. 
Sec. 317. Seven-year cost recovery period for motorsports racing track facility. 
Sec. 318. Expensing of environmental remediation costs. 
Sec. 319. Extension of work opportunity tax credit for Hurricane Katrina employ-
ees. 
Sec. 320. Extension of increased rehabilitation credit for structures in the Gulf Op-
portunity Zone. 
Sec. 321. Enhanced deduction for qualified computer contributions. 
Sec. 322. Tax incentives for investment in the District of Columbia. 
Sec. 323. Enhanced charitable deductions for contributions of food inventory. 
Sec. 324. Extension of enhanced charitable deduction for contributions of book in-
ventory. 
Sec. 325. Extension and modification of duty suspension on wool products; wool re-
search fund; wool duty refunds. 
TITLE IV—EXTENSION OF TAX ADMINISTRATION PROVISIONS 
Sec. 401. Permanent authority for undercover operations. 
Sec. 402. Permanent authority for disclosure of information relating to terrorist ac-
tivities. 
TITLE V—ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS 
Subtitle A—General Provisions 
Sec. 501. $8,500 income threshold used to calculate refundable portion of child tax 
credit. 
Sec. 502. Provisions related to film and television productions. 
Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by 
children. 
Sec. 504. Income averaging for amounts received in connection with the Exxon 
Valdez litigation. 
Sec. 505. Certain farming business machinery and equipment treated as 5-year 
property. 
Sec. 506. Modification of penalty on understatement of taxpayer’s liability by tax 
return preparer. 
Subtitle B—Paul Wellstone and Pete Domenici Mental Health Parity and Addiction 
Equity Act of 2008 
Sec. 511. Short title. 
Sec. 512. Mental health parity. 
TITLE VI—OTHER PROVISIONS 
Sec. 601. Secure rural schools and community self-determination program. 
Sec. 602. Transfer to abandoned mine reclamation fund. 
TITLE VII—DISASTER RELIEF 
Subtitle A—Heartland and Hurricane Ike Disaster Relief 
Sec. 701. Short title. 
Sec. 702. Temporary tax relief for areas damaged by 2008 Midwestern severe 
storms, tornados, and flooding. 
Sec. 703. Reporting requirements relating to disaster relief contributions. 
Sec. 704. Temporary tax-exempt bond financing and low-income housing tax relief 
for areas damaged by Hurricane Ike. 
Subtitle B—National Disaster Relief 
Sec. 706. Losses attributable to federally declared disasters. 
Sec. 707. Expensing of Qualified Disaster Expenses. 
Sec. 708. Net operating losses attributable to federally declared disasters.
H. R. 1424—99 
Sec. 709. Waiver of certain mortgage revenue bond requirements following feder-
ally declared disasters. 
Sec. 710. Special depreciation allowance for qualified disaster property. 
Sec. 711. Increased expensing for qualified disaster assistance property. 
Sec. 712. Coordination with Heartland disaster relief. 
TITLE VIII—SPENDING REDUCTIONS AND APPROPRIATE REVENUE 
RAISERS FOR NEW TAX RELIEF POLICY 
Sec. 801. Nonqualified deferred compensation from certain tax indifferent parties. 
TITLE I—ALTERNATIVE MINIMUM TAX 
RELIEF 
SEC. 101. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR 
NONREFUNDABLE PERSONAL CREDITS. 
(a) IN GENERAL.—Paragraph (2) of section 26(a) (relating to 
special rule for taxable years 2000 through 2007) is amended— 
(1) by striking ‘‘or 2007’’ and inserting ‘‘2007, or 2008’’, 
and 
(2) by striking ‘‘2007’’ in the heading thereof and inserting 
‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2007. 
SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX 
EXEMPTION AMOUNT. 
(a) IN GENERAL.—Paragraph (1) of section 55(d) (relating to 
exemption amount) is amended— 
(1) by striking ‘‘($66,250 in the case of taxable years begin-
ning in 2007)’’ in subparagraph (A) and inserting ‘‘($69,950 
in the case of taxable years beginning in 2008)’’, and 
(2) by striking ‘‘($44,350 in the case of taxable years begin-
ning in 2007)’’ in subparagraph (B) and inserting ‘‘($46,200 
in the case of taxable years beginning in 2008)’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2007. 
SEC. 103. INCREASE OF AMT REFUNDABLE CREDIT AMOUNT FOR 
INDIVIDUALS WITH LONG-TERM UNUSED CREDITS FOR 
PRIOR YEAR MINIMUM TAX LIABILITY, ETC. 
(a) IN GENERAL.—Paragraph (2) of section 53(e) is amended 
to read as follows: 
‘‘(2) AMT REFUNDABLE CREDIT AMOUNT.—For purposes of 
paragraph (1), the term ‘AMT refundable credit amount’ means, 
with respect to any taxable year, the amount (not in excess 
of the long-term unused minimum tax credit for such taxable 
year) equal to the greater of— 
‘‘(A) 50 percent of the long-term unused minimum tax 
credit for such taxable year, or 
‘‘(B) the amount (if any) of the AMT refundable credit 
amount determined under this paragraph for the taxpayer’s 
preceding taxable year (determined without regard to sub-
section (f)(2)).’’. 
(b) TREATMENT OF CERTAIN UNDERPAYMENTS, INTEREST, AND 
PENALTIES ATTRIBUTABLE TO THE TREATMENT OF INCENTIVE STOCK 
OPTIONS.—Section 53 is amended by adding at the end the following 
new subsection:
H. R. 1424—100 
‘‘(f) TREATMENT OF CERTAIN UNDERPAYMENTS, INTEREST, AND 
PENALTIES ATTRIBUTABLE TO THE TREATMENT OF INCENTIVE STOCK 
OPTIONS.— 
‘‘(1) ABATEMENT.—Any underpayment of tax outstanding 
on the date of the enactment of this subsection which is attrib-
utable to the application of section 56(b)(3) for any taxable 
year ending before January 1, 2008, and any interest or penalty 
with respect to such underpayment which is outstanding on 
such date of enactment, is hereby abated. The amount deter-
mined under subsection (b)(1) shall not include any tax abated 
under the preceding sentence. 
‘‘(2) INCREASE IN CREDIT FOR CERTAIN INTEREST AND PEN-
ALTIES
ALREADY
PAID.—The AMT refundable credit amount, 
and the minimum tax credit determined under subsection (b), 
for the taxpayer’s first 2 taxable years beginning after 
December 31, 2007, shall each be increased by 50 percent 
of the aggregate amount of the interest and penalties which 
were paid by the taxpayer before the date of the enactment 
of this subsection and which would (but for such payment) 
have been abated under paragraph (1).’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to taxable years 
beginning after December 31, 2007. 
(2) ABATEMENT.—Section 53(f)(1), as added by subsection 
(b), shall take effect on the date of the enactment of this 
Act. 
TITLE II—EXTENSION OF INDIVIDUAL 
TAX PROVISIONS 
SEC. 201. DEDUCTION FOR STATE AND LOCAL SALES TAXES. 
(a) IN GENERAL.—Subparagraph (I) of section 164(b)(5) is 
amended by striking ‘‘January 1, 2008’’ and inserting ‘‘January 
1, 2010’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2007. 
SEC. 
202. 
DEDUCTION 
OF 
QUALIFIED 
TUITION 
AND 
RELATED 
EXPENSES. 
(a) IN GENERAL.—Subsection (e) of section 222 (relating to 
termination) is amended by striking ‘‘December 31, 2007’’ and 
inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2007. 
SEC. 203. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND 
SECONDARY SCHOOL TEACHERS. 
(a) IN GENERAL.—Subparagraph (D) of section 62(a)(2) (relating 
to certain expenses of elementary and secondary school teachers) 
is amended by striking ‘‘or 2007’’ and inserting ‘‘2007, 2008, or 
2009’’. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 2007.
H. R. 1424—101 
SEC. 204. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY 
TAXES FOR NONITEMIZERS. 
(a) IN GENERAL.—Subparagraph (C) of section 63(c)(1), as added 
by the Housing Assistance Tax Act of 2008, is amended by inserting 
‘‘or 2009’’ after ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2008. 
SEC. 205. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT 
PLANS FOR CHARITABLE PURPOSES. 
(a) IN
GENERAL.—Subparagraph (F) of section 408(d)(8) 
(relating to termination) is amended by striking ‘‘December 31, 
2007’’ and inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to distributions made in taxable years beginning after 
December 31, 2007. 
SEC. 206. TREATMENT OF CERTAIN DIVIDENDS OF REGULATED 
INVESTMENT COMPANIES. 
(a) INTEREST-RELATED DIVIDENDS.—Subparagraph (C) of section 
871(k)(1) (defining interest-related dividend) is amended by striking 
‘‘December 31, 2007’’ and inserting ‘‘December 31, 2009’’. 
(b) SHORT-TERM CAPITAL GAIN DIVIDENDS.—Subparagraph (C) 
of section 871(k)(2) (defining short-term capital gain dividend) is 
amended by striking ‘‘December 31, 2007’’ and inserting ‘‘December 
31, 2009’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to dividends with respect to taxable years of regulated 
investment companies beginning after December 31, 2007. 
SEC. 207. STOCK IN RIC FOR PURPOSES OF DETERMINING ESTATES 
OF NONRESIDENTS NOT CITIZENS. 
(a) IN GENERAL.—Paragraph (3) of section 2105(d) (relating 
to stock in a RIC) is amended by striking ‘‘December 31, 2007’’ 
and inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to decedents dying after December 31, 2007. 
SEC. 208. QUALIFIED INVESTMENT ENTITIES. 
(a) IN GENERAL.—Clause (ii) of section 897(h)(4)(A) (relating 
to termination) is amended by striking ‘‘December 31, 2007’’ and 
inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall take effect on January 1, 2008. 
TITLE III—EXTENSION OF BUSINESS 
TAX PROVISIONS 
SEC. 301. EXTENSION AND MODIFICATION OF RESEARCH CREDIT. 
(a) EXTENSION.— 
(1) IN GENERAL.—Section 41(h) (relating to termination) 
is amended by striking ‘‘December 31, 2007’’ and inserting 
‘‘December 31, 2009’’ in paragraph (1)(B). 
(2) CONFORMING AMENDMENT.—Subparagraph (D) of sec-
tion 45C(b)(1) (relating to special rule) is amended by striking
H. R. 1424—102 
‘‘after December 31, 2007’’ and inserting ‘‘after December 31, 
2009’’. 
(b) TERMINATION OF ALTERNATIVE INCREMENTAL CREDIT.—Sec-
tion 41(h) is amended by redesignating paragraph (2) as paragraph 
(3), and by inserting after paragraph (1) the following new para-
graph: 
‘‘(2) TERMINATION OF ALTERNATIVE INCREMENTAL CREDIT.— 
No election under subsection (c)(4) shall apply to taxable years 
beginning after December 31, 2008.’’. 
(c) MODIFICATION OF ALTERNATIVE SIMPLIFIED CREDIT.—Para-
graph (5)(A) of section 41(c) (relating to election of alternative 
simplified credit) is amended by striking ‘‘12 percent’’ and inserting 
‘‘14 percent (12 percent in the case of taxable years ending before 
January 1, 2009)’’. 
(d) TECHNICAL CORRECTION.—Paragraph (3) of section 41(h) 
is amended to read as follows: 
‘‘(2) COMPUTATION
FOR
TAXABLE
YEAR
IN
WHICH
CREDIT 
TERMINATES.—In the case of any taxable year with respect 
to which this section applies to a number of days which is 
less than the total number of days in such taxable year— 
‘‘(A) the amount determined under subsection (c)(1)(B) 
with respect to such taxable year shall be the amount 
which bears the same ratio to such amount (determined 
without regard to this paragraph) as the number of days 
in such taxable year to which this section applies bears 
to the total number of days in such taxable year, and 
‘‘(B) for purposes of subsection (c)(5), the average quali-
fied research expenses for the preceding 3 taxable years 
shall be the amount which bears the same ratio to such 
average qualified research expenses (determined without 
regard to this paragraph) as the number of days in such 
taxable year to which this section applies bears to the 
total number of days in such taxable year.’’. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to taxable years 
beginning after December 31, 2007. 
(2) EXTENSION.—The amendments made by subsection (a) 
shall apply to amounts paid or incurred after December 31, 
2007. 
SEC. 302. NEW MARKETS TAX CREDIT. 
Subparagraph (D) of section 45D(f)(1) (relating to national 
limitation on amount of investments designated) is amended by 
striking ‘‘and 2008’’ and inserting ‘‘2008, and 2009’’. 
SEC. 303. SUBPART F EXCEPTION FOR ACTIVE FINANCING INCOME. 
(a) EXEMPT INSURANCE INCOME.—Paragraph (10) of section 
953(e) (relating to application) is amended— 
(1) by striking ‘‘January 1, 2009’’ and inserting ‘‘January 
1, 2010’’, and 
(2) by striking ‘‘December 31, 2008’’ and inserting 
‘‘December 31, 2009’’. 
(b) EXCEPTION TO TREATMENT AS FOREIGN PERSONAL HOLDING 
COMPANY INCOME.—Paragraph (9) of section 954(h) (relating to 
application) is amended by striking ‘‘January 1, 2009’’ and inserting 
‘‘January 1, 2010’’.
H. R. 1424—103 
SEC. 304. EXTENSION OF LOOK-THRU RULE FOR RELATED CON-
TROLLED FOREIGN CORPORATIONS. 
(a) IN
GENERAL.—Subparagraph (C) of section 954(c)(6) 
(relating to application) is amended by striking ‘‘January 1, 2009’’ 
and inserting ‘‘January 1, 2010’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years of foreign corporations beginning after 
December 31, 2007, and to taxable years of United States share-
holders with or within which such taxable years of foreign corpora-
tions end. 
SEC. 305. EXTENSION OF 15-YEAR STRAIGHT-LINE COST RECOVERY 
FOR QUALIFIED LEASEHOLD IMPROVEMENTS AND QUALI-
FIED RESTAURANT IMPROVEMENTS; 15-YEAR STRAIGHT- 
LINE COST RECOVERY FOR CERTAIN IMPROVEMENTS TO 
RETAIL SPACE. 
(a) EXTENSION
OF LEASEHOLD
AND RESTAURANT IMPROVE-
MENTS.— 
(1) IN GENERAL.—Clauses (iv) and (v) of section 168(e)(3)(E) 
(relating to 15-year property) are each amended by striking 
‘‘January 1, 2008’’ and inserting ‘‘January 1, 2010’’. 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to property placed in service after December 
31, 2007. 
(b) TREATMENT TO INCLUDE NEW CONSTRUCTION.— 
(1) IN GENERAL.—Paragraph (7) of section 168(e) (relating 
to classification of property) is amended to read as follows: 
‘‘(7) QUALIFIED RESTAURANT PROPERTY.— 
‘‘(A) IN GENERAL.—The term ‘qualified restaurant prop-
erty’ means any section 1250 property which is— 
‘‘(i) a building, if such building is placed in service 
after December 31, 2008, and before January 1, 2010, 
or 
‘‘(ii) an improvement to a building, 
if more than 50 percent of the building’s square footage 
is devoted to preparation of, and seating for on-premises 
consumption of, prepared meals. 
‘‘(B) EXCLUSION FROM BONUS DEPRECIATION.—Property 
described in this paragraph shall not be considered quali-
fied property for purposes of subsection (k).’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to property placed in service after December 
31, 2008. 
(c) RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN IMPROVE-
MENTS TO RETAIL SPACE.— 
(1) 
15-YEAR
RECOVERY
PERIOD.—Section 
168(e)(3)(E) 
(relating to 15-year property) is amended by striking ‘‘and’’ 
at the end of clause (vii), by striking the period at the end 
of clause (viii) and inserting ‘‘, and’’, and by adding at the 
end the following new clause: 
‘‘(ix) any qualified retail improvement property 
placed in service after December 31, 2008, and before 
January 1, 2010.’’. 
(2) QUALIFIED
RETAIL
IMPROVEMENT
PROPERTY.—Section 
168(e) is amended by adding at the end the following new 
paragraph: 
‘‘(8) QUALIFIED RETAIL IMPROVEMENT PROPERTY.—
H. R. 1424—104 
‘‘(A) IN GENERAL.—The term ‘qualified retail improve-
ment property’ means any improvement to an interior por-
tion of a building which is nonresidential real property 
if— 
‘‘(i) such portion is open to the general public and 
is used in the retail trade or business of selling tangible 
personal property to the general public, and 
‘‘(ii) such improvement is placed in service more 
than 3 years after the date the building was first 
placed in service. 
‘‘(B) IMPROVEMENTS MADE BY OWNER.—In the case of 
an improvement made by the owner of such improvement, 
such improvement shall be qualified retail improvement 
property (if at all) only so long as such improvement is 
held by such owner. Rules similar to the rules under para-
graph (6)(B) shall apply for purposes of the preceding sen-
tence. 
‘‘(C) CERTAIN
IMPROVEMENTS
NOT
INCLUDED.—Such 
term shall not include any improvement for which the 
expenditure is attributable to— 
‘‘(i) the enlargement of the building, 
‘‘(ii) any elevator or escalator, 
‘‘(iii) any structural component benefitting a 
common area, or 
‘‘(iv) the internal structural framework of the 
building. 
‘‘(D) EXCLUSION FROM BONUS DEPRECIATION.—Property 
described in this paragraph shall not be considered quali-
fied property for purposes of subsection (k). 
‘‘(E) TERMINATION.—Such term shall not include any 
improvement placed in service after December 31, 2009.’’. 
(3) REQUIREMENT TO USE STRAIGHT LINE METHOD.—Section 
168(b)(3) is amended by adding at the end the following new 
subparagraph: 
‘‘(I) Qualified retail improvement property described 
in subsection (e)(8).’’. 
(4) ALTERNATIVE SYSTEM.—The table contained in section 
168(g)(3)(B) is amended by inserting after the item relating 
to subparagraph (E)(viii) the following new item: 
‘‘(E)(ix) .............................................................................
39’’. 
(5) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to property placed in service after December 
31, 2008. 
SEC. 306. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS 
TO CONTROLLING EXEMPT ORGANIZATIONS. 
(a) IN GENERAL.—Clause (iv) of section 512(b)(13)(E) (relating 
to termination) is amended by striking ‘‘December 31, 2007’’ and 
inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to payments received or accrued after December 31, 
2007.
H. R. 1424—105 
SEC. 307. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING 
CHARITABLE CONTRIBUTIONS OF PROPERTY. 
(a) IN
GENERAL.—The last sentence of section 1367(a)(2) 
(relating to decreases in basis) is amended by striking ‘‘December 
31, 2007’’ and inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to contributions made in taxable years beginning after 
December 31, 2007. 
SEC. 308. INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAX 
TO PUERTO RICO AND THE VIRGIN ISLANDS. 
(a) IN GENERAL.—Paragraph (1) of section 7652(f) is amended 
by striking ‘‘January 1, 2008’’ and inserting ‘‘January 1, 2010’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to distilled spirits brought into the United States after 
December 31, 2007. 
SEC. 309. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT FOR 
AMERICAN SAMOA. 
(a) IN GENERAL.—Subsection (d) of section 119 of division A 
of the Tax Relief and Health Care Act of 2006 is amended— 
(1) by striking ‘‘first two taxable years’’ and inserting ‘‘first 
4 taxable years’’, and 
(2) by striking ‘‘January 1, 2008’’ and inserting ‘‘January 
1, 2010’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2007. 
SEC. 310. EXTENSION OF MINE RESCUE TEAM TRAINING CREDIT. 
Section 45N(e) (relating to termination) is amended by striking 
‘‘December 31, 2008’’ and inserting ‘‘December 31, 2009’’. 
SEC. 311. EXTENSION OF ELECTION TO EXPENSE ADVANCED MINE 
SAFETY EQUIPMENT. 
Section 179E(g) (relating to termination) is amended by striking 
‘‘December 31, 2008’’ and inserting ‘‘December 31, 2009’’. 
SEC. 312. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIB-
UTABLE 
TO 
DOMESTIC 
PRODUCTION 
ACTIVITIES 
IN 
PUERTO RICO. 
(a) IN
GENERAL.—Subparagraph (C) of section 199(d)(8) 
(relating to termination) is amended— 
(1) by striking ‘‘first 2 taxable years’’ and inserting ‘‘first 
4 taxable years’’, and 
(2) by striking ‘‘January 1, 2008’’ and inserting ‘‘January 
1, 2010’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2007. 
SEC. 313. QUALIFIED ZONE ACADEMY BONDS. 
(a) IN GENERAL.—Subpart I of part IV of subchapter A of 
chapter 1 is amended by adding at the end the following new 
section: 
‘‘SEC. 54E. QUALIFIED ZONE ACADEMY BONDS. 
‘‘(a) QUALIFIED ZONE ACADEMY BONDS.—For purposes of this 
subchapter, the term ‘qualified zone academy bond’ means any 
bond issued as part of an issue if—
H. R. 1424—106 
‘‘(1) 100 percent of the available project proceeds of such 
issue are to be used for a qualified purpose with respect to 
a qualified zone academy established by an eligible local edu-
cation agency, 
‘‘(2) the bond is issued by a State or local government 
within the jurisdiction of which such academy is located, and 
‘‘(3) the issuer— 
‘‘(A) designates such bond for purposes of this section, 
‘‘(B) certifies that it has written assurances that the 
private business contribution requirement of subsection (b) 
will be met with respect to such academy, and 
‘‘(C) certifies that it has the written approval of the 
eligible local education agency for such bond issuance. 
‘‘(b) PRIVATE BUSINESS CONTRIBUTION REQUIREMENT.—For pur-
poses of subsection (a), the private business contribution require-
ment of this subsection is met with respect to any issue if the 
eligible local education agency that established the qualified zone 
academy has written commitments from private entities to make 
qualified contributions having a present value (as of the date of 
issuance of the issue) of not less than 10 percent of the proceeds 
of the issue. 
‘‘(c) LIMITATION ON AMOUNT OF BONDS DESIGNATED.— 
‘‘(1) NATIONAL
LIMITATION.—There is a national zone 
academy bond limitation for each calendar year. Such limitation 
is $400,000,000 for 2008 and 2009, and, except as provided 
in paragraph (4), zero thereafter. 
‘‘(2) ALLOCATION
OF
LIMITATION.—The national zone 
academy bond limitation for a calendar year shall be allocated 
by the Secretary among the States on the basis of their respec-
tive populations of individuals below the poverty line (as defined 
by the Office of Management and Budget). The limitation 
amount allocated to a State under the preceding sentence shall 
be allocated by the State education agency to qualified zone 
academies within such State. 
‘‘(3) DESIGNATION SUBJECT TO LIMITATION AMOUNT.—The 
maximum aggregate face amount of bonds issued during any 
calendar year which may be designated under subsection (a) 
with respect to any qualified zone academy shall not exceed 
the limitation amount allocated to such academy under para-
graph (2) for such calendar year. 
‘‘(4) CARRYOVER OF UNUSED LIMITATION.— 
‘‘(A) IN GENERAL.—If for any calendar year— 
‘‘(i) the limitation amount for any State, exceeds 
‘‘(ii) the amount of bonds issued during such year 
which are designated under subsection (a) with respect 
to qualified zone academies within such State, 
the limitation amount for such State for the following cal-
endar year shall be increased by the amount of such excess. 
‘‘(B) LIMITATION ON CARRYOVER.—Any carryforward of 
a limitation amount may be carried only to the first 2 
years following the unused limitation year. For purposes 
of the preceding sentence, a limitation amount shall be 
treated as used on a first-in first-out basis. 
‘‘(C) COORDINATION WITH SECTION 1397E.—Any carry-
over determined under section 1397E(e)(4) (relating to 
carryover of unused limitation) with respect to any State 
to calendar year 2008 or 2009 shall be treated for purposes
H. R. 1424—107 
of this section as a carryover with respect to such State 
for such calendar year under subparagraph (A), and the 
limitation of subparagraph (B) shall apply to such carryover 
taking into account the calendar years to which such carry-
over relates. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED ZONE ACADEMY.—The term ‘qualified zone 
academy’ means any public school (or academic program within 
a public school) which is established by and operated under 
the supervision of an eligible local education agency to provide 
education or training below the postsecondary level if— 
‘‘(A) such public school or program (as the case may 
be) is designed in cooperation with business to enhance 
the academic curriculum, increase graduation and employ-
ment rates, and better prepare students for the rigors 
of college and the increasingly complex workforce, 
‘‘(B) students in such public school or program (as 
the case may be) will be subject to the same academic 
standards and assessments as other students educated by 
the eligible local education agency, 
‘‘(C) the comprehensive education plan of such public 
school or program is approved by the eligible local education 
agency, and 
‘‘(D)(i) such public school is located in an empowerment 
zone or enterprise community (including any such zone 
or community designated after the date of the enactment 
of this section), or 
‘‘(ii) there is a reasonable expectation (as of the date 
of issuance of the bonds) that at least 35 percent of the 
students attending such school or participating in such 
program (as the case may be) will be eligible for free 
or reduced-cost lunches under the school lunch program 
established under the National School Lunch Act. 
‘‘(2) ELIGIBLE LOCAL EDUCATION AGENCY.—For purposes of 
this section, the term ‘eligible local education agency’ means 
any local educational agency as defined in section 9101 of 
the Elementary and Secondary Education Act of 1965. 
‘‘(3) QUALIFIED
PURPOSE.—The term ‘qualified purpose’ 
means, with respect to any qualified zone academy— 
‘‘(A) rehabilitating or repairing the public school facility 
in which the academy is established, 
‘‘(B) providing equipment for use at such academy, 
‘‘(C) developing course materials for education to be 
provided at such academy, and 
‘‘(D) training teachers and other school personnel in 
such academy. 
‘‘(4) QUALIFIED CONTRIBUTIONS.—The term ‘qualified con-
tribution’ means any contribution (of a type and quality accept-
able to the eligible local education agency) of— 
‘‘(A) equipment for use in the qualified zone academy 
(including state-of-the-art technology and vocational equip-
ment), 
‘‘(B) technical assistance in developing curriculum or 
in training teachers in order to promote appropriate market 
driven technology in the classroom, 
‘‘(C) services of employees as volunteer mentors,
H. R. 1424—108 
‘‘(D) internships, field trips, or other educational 
opportunities outside the academy for students, or 
‘‘(E) any other property or service specified by the 
eligible local education agency.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 54A(d), as amended by this 
Act, is amended by striking ‘‘or’’ at the end of subparagraph 
(B), by inserting ‘‘or’’ at the end of subparagraph (C), and 
by inserting after subparagraph (C) the following new subpara-
graph: 
‘‘(D) a qualified zone academy bond,’’. 
(2) Subparagraph (C) of section 54A(d)(2), as amended by 
this Act, is amended by striking ‘‘and’’ at the end of clause 
(ii), by striking the period at the end of clause (iii) and inserting 
‘‘, and’’, and by adding at the end the following new clause: 
‘‘(iv) in the case of a qualified zone academy bond, 
a purpose specified in section 54E(a)(1).’’. 
(3) Section 1397E is amended by adding at the end the 
following new subsection: 
‘‘(m) TERMINATION.—This section shall not apply to any obliga-
tion issued after the date of the enactment of the Tax Extenders 
and Alternative Minimum Tax Relief Act of 2008.’’. 
(4) The table of sections for subpart I of part IV of sub-
chapter A of chapter 1 is amended by adding at the end the 
following new item: 
‘‘Sec. 54E. Qualified zone academy bonds.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to obligations issued after the date of the enactment 
of this Act. 
SEC. 314. INDIAN EMPLOYMENT CREDIT. 
(a) IN GENERAL.—Subsection (f) of section 45A (relating to 
termination) is amended by striking ‘‘December 31, 2007’’ and 
inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2007. 
SEC. 315. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY 
ON INDIAN RESERVATIONS. 
(a) IN GENERAL.—Paragraph (8) of section 168(j) (relating to 
termination) is amended by striking ‘‘December 31, 2007’’ and 
inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to property placed in service after December 31, 2007. 
SEC. 316. RAILROAD TRACK MAINTENANCE. 
(a) IN GENERAL.—Subsection (f) of section 45G (relating to 
application of section) is amended by striking ‘‘January 1, 2008’’ 
and inserting ‘‘January 1, 2010’’. 
(b) CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM TAX.— 
Subparagraph (B) of section 38(c)(4), as amended by this Act, is 
amended— 
(1) by redesignating clauses (v), (vi), and (vii) as clauses 
(vi), (vii), and (viii), respectively, and 
(2) by inserting after clause (iv) the following new clause: 
‘‘(v) the credit determined under section 45G,’’. 
(c) EFFECTIVE DATES.—
H. R. 1424—109 
(1) The amendment made by subsection (a) shall apply 
to expenditures paid or incurred during taxable years beginning 
after December 31, 2007. 
(2) The amendments made by subsection (b) shall apply 
to credits determined under section 45G of the Internal Revenue 
Code of 1986 in taxable years beginning after December 31, 
2007, and to carrybacks of such credits. 
SEC. 317. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS 
RACING TRACK FACILITY. 
(a) IN
GENERAL.—Subparagraph (D) of section 168(i)(15) 
(relating to termination) is amended by striking ‘‘December 31, 
2007’’ and inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to property placed in service after December 31, 2007. 
SEC. 318. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS. 
(a) IN GENERAL.—Subsection (h) of section 198 (relating to 
termination) is amended by striking ‘‘December 31, 2007’’ and 
inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to expenditures paid or incurred after December 31, 
2007. 
SEC. 319. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR 
HURRICANE KATRINA EMPLOYEES. 
(a) IN GENERAL.—Paragraph (1) of section 201(b) of the Katrina 
Emergency Tax Relief Act of 2005 is amended by striking ‘‘2- 
year’’ and inserting ‘‘4-year’’. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to individuals hired after August 27, 2007. 
SEC. 320. EXTENSION OF INCREASED REHABILITATION CREDIT FOR 
STRUCTURES IN THE GULF OPPORTUNITY ZONE. 
(a) IN GENERAL.—Subsection (h) of section 1400N is amended 
by striking ‘‘December 31, 2008’’ and inserting ‘‘December 31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to expenditures paid or incurred after the date of the 
enactment of this Act. 
SEC. 321. ENHANCED DEDUCTION FOR QUALIFIED COMPUTER CON-
TRIBUTIONS. 
(a) IN GENERAL.—Subparagraph (G) of section 170(e)(6) is 
amended by striking ‘‘December 31, 2007’’ and inserting ‘‘December 
31, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to contributions made during taxable years beginning 
after December 31, 2007. 
SEC. 322. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF 
COLUMBIA. 
(a) DESIGNATION OF ZONE.— 
(1) IN GENERAL.—Subsection (f) of section 1400 is amended 
by striking ‘‘2007’’ both places it appears and inserting ‘‘2009’’. 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to periods beginning after December 31, 
2007. 
(b) TAX-EXEMPT ECONOMIC DEVELOPMENT BONDS.—
H. R. 1424—110 
(1) IN
GENERAL.—Subsection (b) of section 1400A is 
amended by striking ‘‘2007’’ and inserting ‘‘2009’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to bonds issued after December 31, 2007. 
(c) ZERO PERCENT CAPITAL GAINS RATE.— 
(1) IN
GENERAL.—Subsection (b) of section 1400B is 
amended by striking ‘‘2008’’ each place it appears and inserting 
‘‘2010’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1400B(e)(2) is amended— 
(i) by striking ‘‘2012’’ and inserting ‘‘2014’’, and 
(ii) by striking ‘‘2012’’ in the heading thereof and 
inserting ‘‘2014’’. 
(B) Section 1400B(g)(2) is amended by striking ‘‘2012’’ 
and inserting ‘‘2014’’. 
(C) Section 1400F(d) is amended by striking ‘‘2012’’ 
and inserting ‘‘2014’’. 
(3) EFFECTIVE DATES.— 
(A) EXTENSION.—The amendments made by paragraph 
(1) shall apply to acquisitions after December 31, 2007. 
(B) CONFORMING
AMENDMENTS.—The amendments 
made by paragraph (2) shall take effect on the date of 
the enactment of this Act. 
(d) FIRST-TIME HOMEBUYER CREDIT.— 
(1) IN
GENERAL.—Subsection (i) of section 1400C is 
amended by striking ‘‘2008’’ and inserting ‘‘2010’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to property purchased after December 31, 
2007. 
SEC. 323. ENHANCED CHARITABLE DEDUCTIONS FOR CONTRIBUTIONS 
OF FOOD INVENTORY. 
(a) INCREASED AMOUNT OF DEDUCTION.— 
(1) IN GENERAL.—Clause (iv) of section 170(e)(3)(C) (relating 
to termination) is amended by striking ‘‘December 31, 2007’’ 
and inserting ‘‘December 31, 2009’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to contributions made after December 31, 
2007. 
(b) TEMPORARY SUSPENSION OF LIMITATIONS ON CHARITABLE 
CONTRIBUTIONS.— 
(1) IN
GENERAL.—Section 170(b) is amended by adding 
at the end the following new paragraph: 
‘‘(3) TEMPORARY
SUSPENSION
OF
LIMITATIONS
ON
CHARI-
TABLE CONTRIBUTIONS.—In the case of a qualified farmer or 
rancher (as defined in paragraph (1)(E)(v)), any charitable con-
tribution of food— 
‘‘(A) to which subsection (e)(3)(C) applies (without 
regard to clause (ii) thereof), and 
‘‘(B) which is made during the period beginning on 
the date of the enactment of this paragraph and before 
January 1, 2009, 
shall be treated for purposes of paragraph (1)(E) or (2)(B), 
whichever is applicable, as if it were a qualified conservation 
contribution which is made by a qualified farmer or rancher 
and which otherwise meets the requirements of such para-
graph.’’.
H. R. 1424—111 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to taxable years ending after the date of 
the enactment of this Act. 
SEC. 324. EXTENSION OF ENHANCED CHARITABLE DEDUCTION FOR 
CONTRIBUTIONS OF BOOK INVENTORY. 
(a) EXTENSION.—Clause (iv) of section 170(e)(3)(D) (relating 
to termination) is amended by striking ‘‘December 31, 2007’’ and 
inserting ‘‘December 31, 2009’’. 
(b) CLERICAL AMENDMENT.—Clause (iii) of section 170(e)(3)(D) 
(relating to certification by donee) is amended by inserting ‘‘of 
books’’ after ‘‘to any contribution’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to contributions made after December 31, 2007. 
SEC. 325. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON 
WOOL PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY 
REFUNDS. 
(a) EXTENSION OF TEMPORARY DUTY REDUCTIONS.—Each of the 
following headings of the Harmonized Tariff Schedule of the United 
States is amended by striking the date in the effective period 
column and inserting ‘‘12/31/2014’’: 
(1) Heading 9902.51.11 (relating to fabrics of worsted wool). 
(2) Heading 9902.51.13 (relating to yarn of combed wool). 
(3) Heading 9902.51.14 (relating to wool fiber, waste, 
garnetted stock, combed wool, or wool top). 
(4) Heading 9902.51.15 (relating to fabrics of combed wool). 
(5) Heading 9902.51.16 (relating to fabrics of combed wool). 
(b) EXTENSION OF DUTY REFUNDS AND WOOL RESEARCH TRUST 
FUND.— 
(1) IN
GENERAL.—Section 4002(c) of the Wool Suit and 
Textile Trade Extension Act of 2004 (Public Law 108–429; 
118 Stat. 2603) is amended— 
(A) in paragraph (3)(C), by striking ‘‘2010’’ and 
inserting ‘‘2015’’; and 
(B) in paragraph (6)(A), by striking ‘‘through 2009’’ 
and inserting ‘‘through 2014’’. 
(2) SUNSET.—Section 506(f) of the Trade and Development 
Act of 2000 (Public 106–200; 114 Stat. 303 (7 U.S.C. 7101 
note)) is amended by striking ‘‘2010’’ and inserting ‘‘2015’’. 
TITLE IV—EXTENSION OF TAX 
ADMINISTRATION PROVISIONS 
SEC. 401. PERMANENT AUTHORITY FOR UNDERCOVER OPERATIONS. 
(a) IN GENERAL.—Section 7608(c) (relating to rules relating 
to undercover operations) is amended by striking paragraph (6). 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to operations conducted after the date of the enactment 
of this Act. 
SEC. 402. PERMANENT AUTHORITY FOR DISCLOSURE OF INFORMA-
TION RELATING TO TERRORIST ACTIVITIES. 
(a) DISCLOSURE OF RETURN INFORMATION TO APPRISE APPRO-
PRIATE OFFICIALS OF TERRORIST ACTIVITIES.—Subparagraph (C) of 
section 6103(i)(3) is amended by striking clause (iv).
H. R. 1424—112 
(b) DISCLOSURE UPON REQUEST OF INFORMATION RELATING TO 
TERRORIST ACTIVITIES.—Paragraph (7) of section 6103(i) is amended 
by striking subparagraph (E). 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to disclosures after the date of the enactment of this 
Act. 
TITLE V—ADDITIONAL TAX RELIEF AND 
OTHER TAX PROVISIONS 
Subtitle A—General Provisions 
SEC. 501. $8,500 INCOME THRESHOLD USED TO CALCULATE REFUND-
ABLE PORTION OF CHILD TAX CREDIT. 
(a) IN GENERAL.—Section 24(d) is amended by adding at the 
end the following new paragraph: 
‘‘(4) SPECIAL RULE FOR 2008.—Notwithstanding paragraph 
(3), in the case of any taxable year beginning in 2008, the 
dollar amount in effect for such taxable year under paragraph 
(1)(B)(i) shall be $8,500.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2007. 
SEC. 502. PROVISIONS RELATED TO FILM AND TELEVISION PRODUC-
TIONS. 
(a) EXTENSION OF EXPENSING RULES FOR QUALIFIED FILM AND 
TELEVISION PRODUCTIONS.—Section 181(f) (relating to termination) 
is amended by striking ‘‘December 31, 2008’’ and inserting 
‘‘December 31, 2009’’. 
(b) MODIFICATION
OF LIMITATION
ON EXPENSING.—Subpara-
graph (A) of section 181(a)(2) is amended to read as follows: 
‘‘(A) IN GENERAL.—Paragraph (1) shall not apply to 
so much of the aggregate cost of any qualified film or 
television production as exceeds $15,000,000.’’. 
(c) MODIFICATIONS TO DEDUCTION FOR DOMESTIC ACTIVITIES.— 
(1) DETERMINATION OF W–2 WAGES.—Paragraph (2) of sec-
tion 199(b) is amended by adding at the end the following 
new subparagraph: 
‘‘(D) SPECIAL RULE FOR QUALIFIED FILM.—In the case 
of a qualified film, such term shall include compensation 
for services performed in the United States by actors, 
production personnel, directors, and producers.’’. 
(2) DEFINITION OF QUALIFIED FILM.—Paragraph (6) of sec-
tion 199(c) is amended by adding at the end the following: 
‘‘A qualified film shall include any copyrights, trademarks, or 
other intangibles with respect to such film. The methods and 
means of distributing a qualified film shall not affect the avail-
ability of the deduction under this section.’’. 
(3) PARTNERSHIPS.—Subparagraph (A) of section 199(d)(1) 
is amended by striking ‘‘and’’ at the end of clause (ii), by 
striking the period at the end of clause (iii) and inserting 
‘‘, and’’, and by adding at the end the following new clause: 
‘‘(iv) in the case of each partner of a partnership, 
or shareholder of an S corporation, who owns (directly 
or indirectly) at least 20 percent of the capital interests
H. R. 1424—113 
in such partnership or of the stock of such S corpora-
tion— 
‘‘(I) such partner or shareholder shall be 
treated as having engaged directly in any film 
produced by such partnership or S corporation, 
and 
‘‘(II) such partnership or S corporation shall 
be treated as having engaged directly in any film 
produced by such partner or shareholder.’’. 
(d) CONFORMING AMENDMENT.—Section 181(d)(3)(A) is amended 
by striking ‘‘actors’’ and all that follows and inserting ‘‘actors, 
production personnel, directors, and producers.’’. 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, the amendments made by this section shall apply to 
qualified film and television productions commencing after 
December 31, 2007. 
(2) DEDUCTION.—The amendments made by subsection (c) 
shall apply to taxable years beginning after December 31, 2007. 
SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN 
ARROWS DESIGNED FOR USE BY CHILDREN. 
(a) IN GENERAL.—Paragraph (2) of section 4161(b) is amended 
by redesignating subparagraph (B) as subparagraph (C) and by 
inserting after subparagraph (A) the following new subparagraph: 
‘‘(B) 
EXEMPTION
FOR
CERTAIN
WOODEN
ARROW 
SHAFTS.—Subparagraph (A) shall not apply to any shaft 
consisting of all natural wood with no laminations or artifi-
cial means of enhancing the spine of such shaft (whether 
sold separately or incorporated as part of a finished or 
unfinished product) of a type used in the manufacture 
of any arrow which after its assembly— 
‘‘(i) measures 5⁄16 of an inch or less in diameter, 
and 
‘‘(ii) is not suitable for use with a bow described 
in paragraph (1)(A).’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to shafts first sold after the date of enactment of 
this Act. 
SEC. 504. INCOME AVERAGING FOR AMOUNTS RECEIVED IN CONNEC-
TION WITH THE EXXON VALDEZ LITIGATION. 
(a) INCOME AVERAGING
OF AMOUNTS RECEIVED FROM
THE 
EXXON VALDEZ LITIGATION.—For purposes of section 1301 of the 
Internal Revenue Code of 1986— 
(1) any qualified taxpayer who receives any qualified settle-
ment income in any taxable year shall be treated as engaged 
in a fishing business (determined without regard to the commer-
cial nature of the business), and 
(2) such qualified settlement income shall be treated as 
income attributable to such a fishing business for such taxable 
year. 
(b) CONTRIBUTIONS
OF AMOUNTS RECEIVED
TO RETIREMENT 
ACCOUNTS.— 
(1) IN
GENERAL.—Any qualified taxpayer who receives 
qualified settlement income during the taxable year may, at 
any time before the end of the taxable year in which such 
income was received, make one or more contributions to an
H. R. 1424—114 
eligible retirement plan of which such qualified taxpayer is 
a beneficiary in an aggregate amount not to exceed the lesser 
of— 
(A) $100,000 (reduced by the amount of qualified settle-
ment income contributed to an eligible retirement plan 
in prior taxable years pursuant to this subsection), or 
(B) the amount of qualified settlement income received 
by the individual during the taxable year. 
(2) TIME WHEN CONTRIBUTIONS DEEMED MADE.—For pur-
poses of paragraph (1), a qualified taxpayer shall be deemed 
to have made a contribution to an eligible retirement plan 
on the last day of the taxable year in which such income 
is received if the contribution is made on account of such 
taxable year and is made not later than the time prescribed 
by law for filing the return for such taxable year (not including 
extensions thereof). 
(3) TREATMENT OF CONTRIBUTIONS TO ELIGIBLE RETIREMENT 
PLANS.—For purposes of the Internal Revenue Code of 1986, 
if a contribution is made pursuant to paragraph (1) with respect 
to qualified settlement income, then— 
(A) except as provided in paragraph (4)— 
(i) to the extent of such contribution, the qualified 
settlement income shall not be included in taxable 
income, and 
(ii) for purposes of section 72 of such Code, such 
contribution shall not be considered to be investment 
in the contract, 
(B) the qualified taxpayer shall, to the extent of the 
amount of the contribution, be treated— 
(i) as having received the qualified settlement 
income— 
(I) in the case of a contribution to an individual 
retirement 
plan 
(as 
defined 
under 
section 
7701(a)(37) of such Code), in a distribution 
described in section 408(d)(3) of such Code, and 
(II) in the case of any other eligible retirement 
plan, in an eligible rollover distribution (as defined 
under section 402(f)(2) of such Code), and 
(ii) as having transferred the amount to the eligible 
retirement plan in a direct trustee to trustee transfer 
within 60 days of the distribution, 
(C) section 408(d)(3)(B) of the Internal Revenue Code 
of 1986 shall not apply with respect to amounts treated 
as a rollover under this paragraph, and 
(D) section 408A(c)(3)(B) of the Internal Revenue Code 
of 1986 shall not apply with respect to amounts contributed 
to a Roth IRA (as defined under section 408A(b) of such 
Code) or a designated Roth contribution to an applicable 
retirement plan (within the meaning of section 402A of 
such Code) under this paragraph. 
(4) SPECIAL RULE FOR ROTH IRAS AND ROTH 401(k)S.—For 
purposes of the Internal Revenue Code of 1986, if a contribution 
is made pursuant to paragraph (1) with respect to qualified 
settlement income to a Roth IRA (as defined under section 
408A(b) of such Code) or as a designated Roth contribution 
to an applicable retirement plan (within the meaning of section 
402A of such Code), then—
H. R. 1424—115 
(A) the qualified settlement income shall be includible 
in taxable income, and 
(B) for purposes of section 72 of such Code, such con-
tribution shall be considered to be investment in the con-
tract. 
(5) ELIGIBLE RETIREMENT PLAN.—For purpose of this sub-
section, the term ‘‘eligible retirement plan’’ has the meaning 
given such term under section 402(c)(8)(B) of the Internal Rev-
enue Code of 1986. 
(c) TREATMENT
OF QUALIFIED SETTLEMENT INCOME UNDER 
EMPLOYMENT TAXES.— 
(1) SECA.—For purposes of chapter 2 of the Internal Rev-
enue Code of 1986 and section 211 of the Social Security Act, 
no portion of qualified settlement income received by a qualified 
taxpayer shall be treated as self-employment income. 
(2) FICA.—For purposes of chapter 21 of the Internal Rev-
enue Code of 1986 and section 209 of the Social Security Act, 
no portion of qualified settlement income received by a qualified 
taxpayer shall be treated as wages. 
(d) QUALIFIED TAXPAYER.—For purposes of this section, the 
term ‘‘qualified taxpayer’’ means— 
(1) any individual who is a plaintiff in the civil action 
In re Exxon Valdez, No. 89–095–CV (HRH) (Consolidated) (D. 
Alaska); or 
(2) any individual who is a beneficiary of the estate of 
such a plaintiff who— 
(A) acquired the right to receive qualified settlement 
income from that plaintiff; and 
(B) was the spouse or an immediate relative of that 
plaintiff. 
(e) QUALIFIED SETTLEMENT INCOME.—For purposes of this sec-
tion, the term ‘‘qualified settlement income’’ means any interest 
and punitive damage awards which are— 
(1) otherwise includible in taxable income, and 
(2) received (whether as lump sums or periodic payments) 
in connection with the civil action In re Exxon Valdez, No. 
89–095–CV (HRH) (Consolidated) (D. Alaska) (whether pre- 
or post-judgment and whether related to a settlement or judg-
ment). 
SEC. 505. CERTAIN FARMING BUSINESS MACHINERY AND EQUIPMENT 
TREATED AS 5-YEAR PROPERTY. 
(a) IN GENERAL.—Section 168(e)(3)(B) (defining 5-year property) 
is amended by striking ‘‘and’’ at the end of clause (v), by striking 
the period at the end of clause (vi)(III) and inserting ‘‘, and’’, 
and by inserting after clause (vi) the following new clause: 
‘‘(vii) any machinery or equipment (other than any 
grain bin, cotton ginning asset, fence, or other land 
improvement) which is used in a farming business 
(as defined in section 263A(e)(4)), the original use of 
which commences with the taxpayer after December 
31, 2008, and which is placed in service before January 
1, 2010.’’. 
(b) ALTERNATIVE SYSTEM.—The table contained in section 
168(g)(3)(B) (relating to special rule for certain property assigned 
to classes) is amended by inserting after the item relating to 
subparagraph (B)(iii) the following:
H. R. 1424—116 
(B)(vii) ........................................................................
10’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to property placed in service after December 31, 2008. 
SEC. 506. MODIFICATION OF PENALTY ON UNDERSTATEMENT OF TAX-
PAYER’S LIABILITY BY TAX RETURN PREPARER. 
(a) IN GENERAL.—Subsection (a) of section 6694 is amended 
to read as follows: 
‘‘(a) UNDERSTATEMENT DUE
TO UNREASONABLE POSITIONS.— 
‘‘(1) IN GENERAL.—If a tax return preparer— 
‘‘(A) prepares any return or claim of refund with respect 
to which any part of an understatement of liability is 
due to a position described in paragraph (2), and 
‘‘(B) knew (or reasonably should have known) of the 
position, 
such tax return preparer shall pay a penalty with respect 
to each such return or claim in an amount equal to the greater 
of $1,000 or 50 percent of the income derived (or to be derived) 
by the tax return preparer with respect to the return or claim. 
‘‘(2) UNREASONABLE POSITION.— 
‘‘(A) IN
GENERAL.—Except as otherwise provided in 
this paragraph, a position is described in this paragraph 
unless there is or was substantial authority for the position. 
‘‘(B) DISCLOSED POSITIONS.—If the position was dis-
closed as provided in section 6662(d)(2)(B)(ii)(I) and is not 
a position to which subparagraph (C) applies, the position 
is described in this paragraph unless there is a reasonable 
basis for the position. 
‘‘(C) TAX SHELTERS AND REPORTABLE TRANSACTIONS.— 
If the position is with respect to a tax shelter (as defined 
in section 6662(d)(2)(C)(ii)) or a reportable transaction to 
which section 6662A applies, the position is described in 
this paragraph unless it is reasonable to believe that the 
position would more likely than not be sustained on its 
merits. 
‘‘(3) REASONABLE CAUSE EXCEPTION.—No penalty shall be 
imposed under this subsection if it is shown that there is 
reasonable cause for the understatement and the tax return 
preparer acted in good faith.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply— 
(1) in the case of a position other than a position described 
in subparagraph (C) of section 6694(a)(2) of the Internal Rev-
enue Code of 1986 (as amended by this section), to returns 
prepared after May 25, 2007, and 
(2) in the case of a position described in such subparagraph 
(C), to returns prepared for taxable years ending after the 
date of the enactment of this Act.
H. R. 1424—117 
Subtitle 
B—Paul 
Wellstone 
and 
Pete 
Domenici Mental Health Parity and Ad-
diction Equity Act of 2008 
SEC. 511. SHORT TITLE. 
This subtitle may be cited as the ‘‘Paul Wellstone and Pete 
Domenici Mental Health Parity and Addiction Equity Act of 2008’’. 
SEC. 512. MENTAL HEALTH PARITY. 
(a) AMENDMENTS
TO ERISA.—Section 712 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1185a) is 
amended— 
(1) in subsection (a), by adding at the end the following: 
‘‘(3) FINANCIAL
REQUIREMENTS
AND
TREATMENT
LIMITA-
TIONS.— 
‘‘(A) IN GENERAL.—In the case of a group health plan 
(or health insurance coverage offered in connection with 
such a plan) that provides both medical and surgical bene-
fits and mental health or substance use disorder benefits, 
such plan or coverage shall ensure that— 
‘‘(i) the financial requirements applicable to such 
mental health or substance use disorder benefits are 
no more restrictive than the predominant financial 
requirements applied to substantially all medical and 
surgical benefits covered by the plan (or coverage), 
and there are no separate cost sharing requirements 
that are applicable only with respect to mental health 
or substance use disorder benefits; and 
‘‘(ii) the treatment limitations applicable to such 
mental health or substance use disorder benefits are 
no more restrictive than the predominant treatment 
limitations applied to substantially all medical and 
surgical benefits covered by the plan (or coverage) and 
there are no separate treatment limitations that are 
applicable only with respect to mental health or sub-
stance use disorder benefits. 
‘‘(B) DEFINITIONS.—In this paragraph: 
‘‘(i) FINANCIAL REQUIREMENT.—The term ‘financial 
requirement’ 
includes 
deductibles, 
copayments, 
coinsurance, and out-of-pocket expenses, but excludes 
an aggregate lifetime limit and an annual limit subject 
to paragraphs (1) and (2), 
‘‘(ii) PREDOMINANT.—A financial requirement or 
treatment limit is considered to be predominant if it 
is the most common or frequent of such type of limit 
or requirement. 
‘‘(iii) TREATMENT
LIMITATION.—The term ‘treat-
ment limitation’ includes limits on the frequency of 
treatment, number of visits, days of coverage, or other 
similar limits on the scope or duration of treatment. 
‘‘(4) AVAILABILITY OF PLAN INFORMATION.—The criteria for 
medical necessity determinations made under the plan with 
respect to mental health or substance use disorder benefits 
(or the health insurance coverage offered in connection with 
the plan with respect to such benefits) shall be made available
H. R. 1424—118 
by the plan administrator (or the health insurance issuer 
offering such coverage) in accordance with regulations to any 
current or potential participant, beneficiary, or contracting pro-
vider upon request. The reason for any denial under the plan 
(or coverage) of reimbursement or payment for services with 
respect to mental health or substance use disorder benefits 
in the case of any participant or beneficiary shall, on request 
or as otherwise required, be made available by the plan 
administrator (or the health insurance issuer offering such 
coverage) to the participant or beneficiary in accordance with 
regulations. 
‘‘(5) OUT-OF-NETWORK PROVIDERS.—In the case of a plan 
or coverage that provides both medical and surgical benefits 
and mental health or substance use disorder benefits, if the 
plan or coverage provides coverage for medical or surgical bene-
fits provided by out-of-network providers, the plan or coverage 
shall provide coverage for mental health or substance use dis-
order benefits provided by out-of-network providers in a manner 
that is consistent with the requirements of this section.’’; 
(2) in subsection (b), by amending paragraph (2) to read 
as follows: 
‘‘(2) in the case of a group health plan (or health insurance 
coverage offered in connection with such a plan) that provides 
mental health or substance use disorder benefits, as affecting 
the terms and conditions of the plan or coverage relating to 
such benefits under the plan or coverage, except as provided 
in subsection (a).’’; 
(3) in subsection (c)— 
(A) in paragraph (1)(B)— 
(i) by inserting ‘‘(or 1 in the case of an employer 
residing in a State that permits small groups to include 
a single individual)’’ after ‘‘at least 2’’ the first place 
that such appears; and 
(ii) by striking ‘‘and who employs at least 2 
employees on the first day of the plan year’’; and 
(B) by striking paragraph (2) and inserting the fol-
lowing: 
‘‘(2) COST EXEMPTION.— 
‘‘(A) IN GENERAL.—With respect to a group health plan 
(or health insurance coverage offered in connection with 
such a plan), if the application of this section to such 
plan (or coverage) results in an increase for the plan year 
involved of the actual total costs of coverage with respect 
to medical and surgical benefits and mental health and 
substance use disorder benefits under the plan (as deter-
mined and certified under subparagraph (C)) by an amount 
that exceeds the applicable percentage described in 
subparagraph (B) of the actual total plan costs, the provi-
sions of this section shall not apply to such plan (or cov-
erage) during the following plan year, and such exemption 
shall apply to the plan (or coverage) for 1 plan year. An 
employer may elect to continue to apply mental health 
and substance use disorder parity pursuant to this section 
with respect to the group health plan (or coverage) involved 
regardless of any increase in total costs.
H. R. 1424—119 
‘‘(B) APPLICABLE PERCENTAGE.—With respect to a plan 
(or coverage), the applicable percentage described in this 
subparagraph shall be— 
‘‘(i) 2 percent in the case of the first plan year 
in which this section is applied; and 
‘‘(ii) 1 percent in the case of each subsequent plan 
year. 
‘‘(C) DETERMINATIONS BY ACTUARIES.—Determinations 
as to increases in actual costs under a plan (or coverage) 
for purposes of this section shall be made and certified 
by a qualified and licensed actuary who is a member in 
good standing of the American Academy of Actuaries. All 
such determinations shall be in a written report prepared 
by the actuary. The report, and all underlying documenta-
tion relied upon by the actuary, shall be maintained by 
the group health plan or health insurance issuer for a 
period of 6 years following the notification made under 
subparagraph (E). 
‘‘(D) 6-MONTH DETERMINATIONS.—If a group health plan 
(or a health insurance issuer offering coverage in connection 
with a group health plan) seeks an exemption under this 
paragraph, determinations under subparagraph (A) shall 
be made after such plan (or coverage) has complied with 
this section for the first 6 months of the plan year involved. 
‘‘(E) NOTIFICATION.— 
‘‘(i) IN GENERAL.—A group health plan (or a health 
insurance issuer offering coverage in connection with 
a group health plan) that, based upon a certification 
described under subparagraph (C), qualifies for an 
exemption under this paragraph, and elects to imple-
ment the exemption, shall promptly notify the Sec-
retary, the appropriate State agencies, and participants 
and beneficiaries in the plan of such election. 
‘‘(ii) REQUIREMENT.—A notification to the Secretary 
under clause (i) shall include— 
‘‘(I) a description of the number of covered 
lives under the plan (or coverage) involved at the 
time of the notification, and as applicable, at the 
time of any prior election of the cost-exemption 
under this paragraph by such plan (or coverage); 
‘‘(II) for both the plan year upon which a cost 
exemption is sought and the year prior, a descrip-
tion of the actual total costs of coverage with 
respect to medical and surgical benefits and 
mental health and substance use disorder benefits 
under the plan; and 
‘‘(III) for both the plan year upon which a 
cost exemption is sought and the year prior, the 
actual total costs of coverage with respect to 
mental health and substance use disorder benefits 
under the plan. 
‘‘(iii) CONFIDENTIALITY.—A notification to the Sec-
retary under clause (i) shall be confidential. The Sec-
retary shall make available, upon request and on not 
more than an annual basis, an anonymous itemization 
of such notifications, that includes—
H. R. 1424—120 
‘‘(I) a breakdown of States by the size and 
type of employers submitting such notification; and 
‘‘(II) a summary of the data received under 
clause (ii). 
‘‘(F) AUDITS BY APPROPRIATE AGENCIES.—To determine 
compliance with this paragraph, the Secretary may audit 
the books and records of a group health plan or health 
insurance issuer relating to an exemption, including any 
actuarial reports prepared pursuant to subparagraph (C), 
during the 6 year period following the notification of such 
exemption under subparagraph (E). A State agency 
receiving a notification under subparagraph (E) may also 
conduct such an audit with respect to an exemption covered 
by such notification.’’; 
(4) in subsection (e), by striking paragraph (4) and inserting 
the following: 
‘‘(4) MENTAL HEALTH BENEFITS.—The term ‘mental health 
benefits’ means benefits with respect to services for mental 
health conditions, as defined under the terms of the plan and 
in accordance with applicable Federal and State law. 
‘‘(5) SUBSTANCE USE DISORDER BENEFITS.—The term ‘sub-
stance use disorder benefits’ means benefits with respect to 
services for substance use disorders, as defined under the terms 
of the plan and in accordance with applicable Federal and 
State law.’’; 
(5) by striking subsection (f); 
(6) by inserting after subsection (e) the following: 
‘‘(f) SECRETARY REPORT.—The Secretary shall, by January 1, 
2012, and every two years thereafter, submit to the appropriate 
committees of Congress a report on compliance of group health 
plans (and health insurance coverage offered in connection with 
such plans) with the requirements of this section. Such report 
shall include the results of any surveys or audits on compliance 
of group health plans (and health insurance coverage offered in 
connection with such plans) with such requirements and an analysis 
of the reasons for any failures to comply. 
‘‘(g) NOTICE AND ASSISTANCE.—The Secretary, in cooperation 
with the Secretaries of Health and Human Services and Treasury, 
as appropriate, shall publish and widely disseminate guidance and 
information for group health plans, participants and beneficiaries, 
applicable State and local regulatory bodies, and the National 
Association of Insurance Commissioners concerning the require-
ments of this section and shall provide assistance concerning such 
requirements and the continued operation of applicable State law. 
Such guidance and information shall inform participants and bene-
ficiaries of how they may obtain assistance under this section, 
including, where appropriate, assistance from State consumer and 
insurance agencies.’’; 
(7) by striking ‘‘mental health benefits’’ and inserting 
‘‘mental health and substance use disorder benefits’’ each place 
it appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and 
(a)(2)(C); and 
(8) by striking ‘‘mental health benefits’’ and inserting 
‘‘mental health or substance use disorder benefits’’ each place 
it appears (other than in any provision amended by the previous 
paragraph).