198 
(2) ALTERNATIVE METHOD FOR CERTAIN TAX-
PAYERS.—If, as of the first day of the taxable year 
that includes the date of enactment of this Act— 
(A) the taxpayer was required by a regu-
latory agency to compute depreciation for public 
utility property on the basis of an average life 
or composite rate method, and 
(B) the taxpayer’s books and underlying 
records did not contain the vintage account 
data necessary to apply the average rate as-
sumption method, 
the taxpayer will be treated as using a normalization 
method of accounting if, with respect to such juris-
diction, the taxpayer uses the alternative method for 
public utility property that is subject to the regu-
latory authority of that jurisdiction. 
(3) DEFINITIONS.—For purposes of this sub-
section— 
(A) EXCESS
TAX
RESERVE.—The term 
‘‘excess tax reserve’’ means the excess of— 
(i) the reserve for deferred taxes (as 
described in section 168(i)(9)(A)(ii) of the 
Internal Revenue Code of 1986 as in effect 
on the day before the date of the enact-
ment of this Act), over
199 
(ii) the amount which would be the 
balance in such reserve if the amount of 
such reserve were determined by assuming 
that the corporate rate reductions provided 
in this Act were in effect for all prior peri-
ods. 
(B) AVERAGE
RATE
ASSUMPTION
METH-
OD.—The average rate assumption method is 
the method under which the excess in the re-
serve for deferred taxes is reduced over the re-
maining lives of the property as used in its reg-
ulated books of account which gave rise to the 
reserve for deferred taxes. Under such method, 
if timing differences for the property reverse, 
the amount of the adjustment to the reserve for 
the deferred taxes is calculated by multi-
plying— 
(i) the ratio of the aggregate deferred 
taxes for the property to the aggregate 
timing differences for the property as of 
the beginning of the period in question, by 
(ii) the amount of the timing dif-
ferences which reverse during such period.
200 
(C) ALTERNATIVE METHOD.—The ‘‘alter-
native method’’ is the method in which the tax-
payer— 
(i) computes the excess tax reserve on 
all public utility property included in the 
plant account on the basis of the weighted 
average life or composite rate used to com-
pute depreciation for regulatory purposes, 
and 
(ii) reduces the excess tax reserve rat-
ably over the remaining regulatory life of 
the property. 
(4) TAX INCREASED FOR NORMALIZATION VIO-
LATION.—If, for any taxable year ending after the 
date of the enactment of this Act, the taxpayer does 
not use a normalization method of accounting, the 
taxpayer’s tax for the taxable year shall be increased 
by the amount by which it reduces its excess tax re-
serve more rapidly than permitted under a normal-
ization method of accounting. 
Subtitle B—Cost Recovery 
SEC. 3101. INCREASED EXPENSING. 
(a) 
100 
PERCENT
EXPENSING.—Section 
168(k)(1)(A) is amended by striking ‘‘50 percent’’ and in-
serting ‘‘100 percent’’.
201 
(b) EXTENSION THROUGH JANUARY 1, 2023.—Sec-
tion 168(k)(2) is amended— 
(1) in subparagraph (A)(iii), by striking ‘‘Janu-
ary 1, 2020’’ and inserting ‘‘January 1, 2023’’, 
(2) in subparagraph (B)(i)(II), by striking 
‘‘January 1, 2021’’ and inserting ‘‘January 1, 
2024’’, 
(3) in subparagraph (B)(i)(III), by striking 
‘‘January 1, 2020’’ and inserting ‘‘January 1, 
2023’’, 
(4) in subparagraph (B)(ii), by striking ‘‘Janu-
ary 1, 2020’’ in each place it appears and inserting 
‘‘January 1, 2023’’, and 
(5) in subparagraph (E)(i), by striking ‘‘Janu-
ary 1, 2020’’ and replacing it with ‘‘January 1, 
2023’’. 
(c) APPLICATION TO USED PROPERTY.— 
(1) IN GENERAL.—Section 168(k)(2)(A)(ii) is 
amended to read as follows: 
‘‘(ii) the original use of which begins 
with the taxpayer or the acquisition of 
which by the taxpayer meets the require-
ments of clause (ii) of subparagraph (E), 
and’’.
202 
(2) 
ACQUISITION
REQUIREMENTS.—Section 
168(k)(2)(E)(ii) is amended to read as follows: 
‘‘(ii) ACQUISITION REQUIREMENTS.— 
An acquisition of property meets the re-
quirements of this clause if— 
‘‘(I) such property was not used 
by the taxpayer at any time prior to 
such acquisition, and 
‘‘(II) the acquisition of such 
property meets the requirements of 
paragraphs (2)(A), (2)(B), (2)(C), 
and (3) of section 179(d).’’, 
(3) ANTI-ABUSE RULES.—Section 168(k)(2)(E) 
is further amended by amending clause (iii)(I) to 
read as follows: 
‘‘(I) property is used by a lessor 
of such property and such use is the 
lessor’s first use of such property,’’. 
(d) EXCEPTION FOR CERTAIN TRADES AND BUSI-
NESSES NOT SUBJECT TO LIMITATION ON INTEREST EX-
PENSE.—Section 168(k)(2), as amended by section 2001, 
is amended by inserting after subparagraph (F) the fol-
lowing new subparagraph: 
‘‘(G) EXCEPTION FOR PROPERTY OF CER-
TAIN BUSINESSES NOT SUBJECT TO LIMITATION
203 
ON INTEREST EXPENSE.—The term ‘qualified 
property’ shall not include any property used 
in— 
‘‘(i) a trade or business described in 
subparagraph (B) or (C) of section 
163(j)(7), or 
‘‘(ii) a trade or business that has had 
floor plan financing indebtedness (as de-
fined in paragraph (9) of section 163(j)), 
if the floor plan financing interest related 
to such indebtedness was taken into ac-
count under paragraph (1)(C) of such sec-
tion.’’. 
(e) COORDINATION WITH SECTION 280F.—Section 
168(k)(2)(F) is amended— 
(1) by striking ‘‘$8,000’’ in clauses (i) and (iii) 
and inserting ‘‘$16,000’’, and 
(2) in clause (iii)— 
(A) by striking ‘‘placed in service by the 
taxpayer after December 31, 2017’’ and insert-
ing ‘‘acquired by the taxpayer before September 
28, 2017, and placed in service by the taxpayer 
after September 27, 2017’’, and 
(B) by redesignating subclauses (I) and 
(II) as subclauses (II) and (III) respectively,
204 
and inserting before clause (II), as so redesig-
nated, the following new subclause: 
‘‘(I) in the case of a passenger 
automobile placed in service before 
January 1, 2018, ‘$8,000’,’’. 
(f) CONFORMING AMENDMENTS.— 
(1) Section 168(k)(2)(B)(i)(III), as amended, is 
amended by inserting ‘‘binding’’ before ‘‘contract’’. 
(2) Section 168(k)(5) is amended by— 
(A) by striking ‘‘January 1, 2020’’ in sub-
paragraph (A) and inserting ‘‘January 1, 
2023’’, 
(B) by striking ‘‘50 percent’’ in subpara-
graph (A)(i) and inserting ‘‘100 percent’’, and 
(C) by striking subparagraph (F). 
(3) Section 168(k)(6) is amended to read as fol-
lows: 
‘‘(6) PHASE DOWN.—In the case of qualified 
property acquired by the taxpayer before September 
28, 2017, and placed in service by the taxpayer after 
September 27, 2017, paragraph (1)(A) shall be ap-
plied by substituting for ‘100 percent’— 
‘‘(A) ‘50 percent’ in the case of— 
‘‘(i) property placed in service before 
January 1, 2018, and
205 
‘‘(ii) property described in subpara-
graph (B) or (C) of paragraph (2) which 
is placed in service in 2018, 
‘‘(B) ‘40 percent’ in the case of— 
‘‘(i) property placed in service in 2018 
(other than property described in subpara-
graph (B) or (C) of paragraph (2)), and 
‘‘(ii) property described in subpara-
graph (B) or (C) of paragraph (2) which 
is placed in service in 2019, and 
‘‘(C) ‘30 percent’ in the case of— 
‘‘(i) property placed in service in 2019 
(other than property described in subpara-
graph (B) or (C) of paragraph (2)), and 
‘‘(ii) property described in subpara-
graph (B) or (C) of paragraph (2) which 
is placed in service in 2020.’’. 
(4) The heading of section 168(k) is amended 
by striking ‘‘SPECIAL ALLOWANCE
FOR CERTAIN 
PROPERTY ACQUIRED AFTER DECEMBER 31, 2007, 
AND BEFORE JANUARY 1, 2020’’ and inserting 
‘‘FULL EXPENSING OF CERTAIN PROPERTY’’. 
(5) Section 460(c)(6)(B)(ii) is amended by 
striking ‘‘January 1, 2020 (January 1, 2021 in the 
case of property described in section 168(k)(2)(B))’’
206 
and inserting ‘‘January 1, 2023 (January 1, 2024 in 
the 
case 
of 
property 
described 
in 
section 
168(k)(2)(B))’’. 
(g) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except at provided by para-
graph (2), the amendments made by this section 
shall apply to property which— 
(A) is acquired after September 27, 2017, 
and 
(B) is placed in service after such date. 
For purposes of the preceding sentence, property 
shall not be treated as acquired after the date on 
which a written binding contract is entered into for 
such acquisition. 
(2) SPECIFIED
PLANTS.—The amendments 
made by subsection (f)(2) shall apply to specified 
plants planted or grafted after September 27, 2017. 
(3) TRANSITION RULE.—In the case of any tax-
payer’s first taxable year ending after September 27, 
2017, the taxpayer may elect (at such time and in 
such form and manner as the Secretary of the 
Treasury, or his designee, may provide) to apply sec-
tion 168 of the Internal Revenue Code of 1986 with-
out regard to the amendments made by this section.
207 
(4) LIMITATION
ON
NET
OPERATING
LOSS 
CARRYBACKS
ATTRIBUTABLE
TO
FULL
EXPENS-
ING.—In the case of any taxable year which includes 
any portion of the period beginning on September 
28, 2017, and ending on December 31, 2017, the 
amount of any net operating loss for such taxable 
year which may be treated as a net operating loss 
carryback (including any such carryback attributable 
to 
any 
specified 
liability 
loss 
under 
section 
172(b)(1)(C), any corporate equity reduction inter-
est loss under section 172(b)(1)(D), any eligible loss 
under section 172(b)(1)(E), and any farming loss 
under section 172(b)(1)(F)) shall be determined 
without regard to the amendments made by this sec-
tion. For purposes of this paragraph, terms which 
are used in section 172 of the Internal Revenue 
Code of 1986 (determined without regard to the 
amendments made by section 3302) shall have the 
same meaning as when used in such section. 
Subtitle C—Small Business 
Reforms 
SEC. 3201. EXPANSION OF SECTION 179 EXPENSING. 
(a) INCREASED DOLLAR LIMITATIONS.— 
(1) IN
GENERAL.—Section 179(b) is amend-
ed—
208 
(A) by inserting ‘‘($5,000,000, in the case 
of taxable years beginning before January 1, 
2023)’’ after ‘‘$500,000’’ in paragraph (1), and 
(B) by inserting ‘‘($20,000,000, in the 
case of taxable years beginning before January 
1, 2023)’’ after ‘‘$2,000,000’’ in paragraph (2). 
(2) 
INFLATION
ADJUSTMENT.—Section 
179(b)(6) is amended to read as follows: 
‘‘(6) INFLATION ADJUSTMENT.— 
‘‘(A) IN GENERAL.—In the case of a tax-
able year beginning after 2015 (2018 in the 
case of the $5,000,000 and $20,000,000 
amounts in subsection (b)), each dollar amount 
in subsection (b) shall be increased by an 
amount equal to such dollar amount multiplied 
by— 
‘‘(i) in the case of the $500,000 and 
$2,000,000 amounts in subsection (b), the 
cost-of-living adjustment determined under 
section 1(c)(2) for the calendar year in 
which the taxable year begins, determined 
by substituting ‘calendar year 2014’ for 
‘calendar year 2016’ in subparagraph 
(A)(ii) thereof, and
209 
‘‘(ii) in the case of the $5,000,000 
and $20,000,000 amounts in subsection 
(b), the cost-of-living adjustment deter-
mined under section 1(c)(2) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2017’ for ‘calendar year 2016’ in sub-
paragraph (A)(ii) thereof. 
‘‘(B) ROUNDING.—The amount of any in-
crease under subparagraph (A) shall be round-
ed 
to 
the 
nearest 
multiple 
of 
$10,000 
($100,000 in the case of the $5,000,000 and 
$20,000,000 amounts in subsection (b)).’’. 
(b) APPLICATION TO QUALIFIED ENERGY EFFICIENT 
HEATING AND AIR-CONDITIONING PROPERTY.— 
(1) IN GENERAL.—Section 179(f)(2) is amend-
ed by striking ‘‘and’’ at the end of subparagraph 
(B), by striking the period at the end of subpara-
graph (C) and inserting ‘‘, and’’, and by adding at 
the end the following new subparagraph: 
‘‘(D) qualified energy efficient heating and 
air-conditioning property.’’. 
(2) QUALIFIED
ENERGY
EFFICIENT
HEATING 
AND AIR-CONDITIONING PROPERTY.—Section 179(f)
210 
is amended by adding at the end the following new 
paragraph: 
‘‘(3) QUALIFIED ENERGY EFFICIENT HEATING 
AND
AIR-CONDITIONING
PROPERTY.—For purposes 
of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
energy efficient heating and air-conditioning 
property’ means any section 1250 property— 
‘‘(i) with respect to which depreciation 
(or amortization in lieu of depreciation) is 
allowable, 
‘‘(ii) which is installed as part of a 
building’s heating, cooling, ventilation, or 
hot water system, and 
‘‘(iii) which is within the scope of 
Standard 90.1–2007 or any successor 
standard. 
‘‘(B) STANDARD
90.1–2007.—The term 
‘Standard 90.1–2007’ means Standard 90.1– 
2007 of the American Society of Heating, Re-
frigerating and Air-Conditioning Engineers and 
the Illuminating Engineering Society of North 
America (as in effect on the day before the date 
of the adoption of Standard 90.1–2010 of such 
Societies).’’.
211 
(c) EFFECTIVE DATE.— 
(1) INCREASED
DOLLAR
LIMITATIONS.—The 
amendments made by subsection (a) shall apply to 
taxable years beginning after December 31, 2017. 
(2) APPLICATION TO QUALIFIED ENERGY EFFI-
CIENT
HEATING
AND
AIR-CONDITIONING
PROP-
ERTY.—The amendments made by subsection (b) 
shall apply to property acquired and placed in serv-
ice after November 2, 2017. For purposes of the 
preceding sentence, property shall not be treated as 
acquired after the date on which a written binding 
contract is entered into for such acquisition. 
SEC. 3202. SMALL BUSINESS ACCOUNTING METHOD RE-
FORM AND SIMPLIFICATION. 
(a) MODIFICATION OF LIMITATION ON CASH METH-
OD OF ACCOUNTING.— 
(1) INCREASED LIMITATION.—So much of sec-
tion 448(c) as precedes paragraph (2) is amended to 
read as follows: 
‘‘(c) GROSS RECEIPTS TEST.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—A corporation or partner-
ship meets the gross receipts test of this subsection 
for any taxable year if the average annual gross re-
ceipts of such entity for the 3-taxable-year period
212 
ending with the taxable year which precedes such 
taxable year does not exceed $25,000,000.’’. 
(2) APPLICATION OF EXCEPTION ON ANNUAL 
BASIS.—Section 448(b)(3) is amended to read as fol-
lows: 
‘‘(3) ENTITIES WHICH MEET GROSS RECEIPTS 
TEST.—Paragraphs (1) and (2) of subsection (a) 
shall not apply to any corporation or partnership for 
any taxable year if such entity (or any predecessor) 
meets the gross receipts test of subsection (c) for 
such taxable year.’’. 
(3) INFLATION ADJUSTMENT.—Section 448(c) 
is amended by adding at the end the following new 
paragraph: 
‘‘(4) ADJUSTMENT
FOR
INFLATION.—In the 
case of any taxable year beginning after December 
31, 2018, the dollar amount in paragraph (1) shall 
be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(c)(2) for the calendar 
year in which the taxable year begins, by sub-
stituting ‘calendar year 2017’ for ‘calendar year 
2016’ in subparagraph (A)(ii) thereof.
213 
If any amount as increased under the preceding sen-
tence is not a multiple of $1,000,000, such amount 
shall be rounded to the nearest multiple of 
$1,000,000.’’. 
(4) COORDINATION
WITH
SECTION
481.—Sec-
tion 448(d)(7) is amended to read as follows: 
‘‘(7) COORDINATION WITH SECTION 481.—Any 
change in method of accounting made pursuant to 
this section shall be treated for purposes of section 
481 as initiated by the taxpayer and made with the 
consent of the Secretary.’’. 
(5) APPLICATION OF EXCEPTION TO CORPORA-
TIONS ENGAGED IN FARMING.— 
(A) IN
GENERAL.—Section 447(c) is 
amended— 
(i) by inserting ‘‘for any taxable year’’ 
after ‘‘not being a corporation’’ in the mat-
ter preceding paragraph (1), and 
(ii) by amending paragraph (2) to 
read as follows: 
‘‘(2) a corporation which meets the gross re-
ceipts test of section 448(c) for such taxable year.’’. 
(B) COORDINATION WITH SECTION 481.— 
Section 447(f) is amended to read as follows:
214 
‘‘(f) COORDINATION
WITH
SECTION
481.—Any 
change in method of accounting made pursuant to this 
section shall be treated for purposes of section 481 as ini-
tiated by the taxpayer and made with the consent of the 
Secretary.’’. 
(C) CONFORMING AMENDMENTS.—Section 
447 is amended— 
(i) by striking subsections (d), (e), 
(h), and (i), and 
(ii) by redesignating subsections (f) 
and (g) (as amended by subparagraph (B)) 
as subsections (d) and (e), respectively. 
(b) EXEMPTION FROM UNICAP REQUIREMENTS.— 
(1) IN GENERAL.—Section 263A is amended by 
redesignating subsection (i) as subsection (j) and by 
inserting after subsection (h) the following new sub-
section: 
‘‘(i) EXEMPTION
FOR
CERTAIN
SMALL
BUSI-
NESSES.— 
‘‘(1) IN GENERAL.—In the case of any taxpayer 
(other than a tax shelter prohibited from using the 
cash receipts and disbursements method of account-
ing under section 448(a)(3)) which meets the gross 
receipts test of section 448(c) for any taxable year,
215 
this section shall not apply with respect to such tax-
payer for such taxable year. 
‘‘(2) APPLICATION OF GROSS RECEIPTS TEST 
TO INDIVIDUALS, ETC.— In the case of any taxpayer 
which is not a corporation or a partnership, the 
gross receipts test of section 448(c) shall be applied 
in the same manner as if each trade or business of 
such taxpayer were a corporation or partnership. 
‘‘(3) COORDINATION WITH SECTION 481.—Any 
change in method of accounting made pursuant to 
this subsection shall be treated for purposes of sec-
tion 481 as initiated by the taxpayer and made with 
the consent of the Secretary.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
263A(b)(2) is amended to read as follows: 
‘‘(2) PROPERTY ACQUIRED FOR RESALE.—Real 
or personal property described in section 1221(a)(1) 
which is acquired by the taxpayer for resale.’’. 
(c) EXEMPTION FROM INVENTORIES.—Section 471 
is amended by redesignating subsection (c) as subsection 
(d) and by inserting after subsection (b) the following new 
subsection: 
‘‘(c) EXEMPTION
FOR
CERTAIN
SMALL
BUSI-
NESSES.—
216 
‘‘(1) IN GENERAL.—In the case of any taxpayer 
(other than a tax shelter prohibited from using the 
cash receipts and disbursements method of account-
ing under section 448(a)(3)) which meets the gross 
receipts test of section 448(c) for any taxable year— 
‘‘(A) subsection (a) shall not apply with re-
spect to such taxpayer for such taxable year, 
and 
‘‘(B) the taxpayer’s method of accounting 
for inventory for such taxable year shall not be 
treated as failing to clearly reflect income if 
such method either— 
‘‘(i) treats inventory as non-incidental 
materials and supplies, or 
‘‘(ii) conforms to such taxpayer’s 
method of accounting reflected in an appli-
cable financial statement of the taxpayer 
with respect to such taxable year or, if the 
taxpayer does not have any applicable fi-
nancial statement with respect to such tax-
able year, the books and records of the 
taxpayer prepared in accordance with the 
taxpayer’s accounting procedures.
217 
‘‘(2) APPLICABLE
FINANCIAL
STATEMENT.— 
For purposes of this subsection, the term ‘applicable 
financial statement’ means— 
‘‘(A) a financial statement which is cer-
tified as being prepared in accordance with gen-
erally accepted accounting principles and which 
is— 
‘‘(i) a 10-K (or successor form), or 
annual statement to shareholders, required 
to be filed by the taxpayer with the United 
States Securities and Exchange Commis-
sion, 
‘‘(ii) an audited financial statement of 
the taxpayer which is used for— 
‘‘(I) credit purposes, 
‘‘(II) reporting to shareholders, 
partners, or other proprietors, or to 
beneficiaries, or 
‘‘(III) 
any 
other 
substantial 
nontax purpose, 
but only if there is no statement of the 
taxpayer described in clause (i), or 
‘‘(iii) filed by the taxpayer with any 
other Federal or State agency for nontax 
purposes, but only if there is no statement
218 
of the taxpayer described in clause (i) or 
(ii), or 
‘‘(B) a financial statement of the taxpayer 
which— 
‘‘(i) is used for a purpose described in 
subclause (I), (II), or (III) of subpara-
graph (A)(ii), or 
‘‘(ii) filed by the taxpayer with any 
regulatory or governmental body (whether 
domestic or foreign) specified by the Sec-
retary, 
but only if there is no statement of the taxpayer 
described in subparagraph (A). 
‘‘(3) APPLICATION OF GROSS RECEIPTS TEST 
TO INDIVIDUALS, ETC.—In the case of any taxpayer 
which is not a corporation or a partnership, the 
gross receipts test of section 448(c) shall be applied 
in the same manner as if each trade or business of 
such taxpayer were a corporation or partnership. 
‘‘(4) COORDINATION WITH SECTION 481.—Any 
change in method of accounting made pursuant to 
this subsection shall be treated for purposes of sec-
tion 481 as initiated by the taxpayer and made with 
the consent of the Secretary.’’.
219 
(d) EXEMPTION FROM PERCENTAGE COMPLETION 
FOR LONG-TERM CONTRACTS.— 
(1) IN
GENERAL.—Section 460(e)(1)(B) is 
amended— 
(A) by inserting ‘‘(other than a tax shelter 
prohibited from using the cash receipts and dis-
bursements method of accounting under section 
448(a)(3))’’ after ‘‘taxpayer’’ in the matter pre-
ceding clause (i), and 
(B) by amending clause (ii) to read as fol-
lows: 
‘‘(ii) who meets the gross receipts test 
of section 448(c) for the taxable year in 
which such contract is entered into.’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
460(e) is amended by striking paragraphs (2) and 
(3), by redesignating paragraphs (4), (5), and (6) as 
paragraphs (3), (4), and (5), respectively, and by in-
serting after paragraph (1) the following new para-
graph: 
‘‘(2) RULES
RELATED
TO
GROSS
RECEIPTS 
TEST.— 
‘‘(A) APPLICATION
OF
GROSS
RECEIPTS 
TEST TO INDIVIDUALS, ETC.— For purposes of 
paragraph (1)(B)(ii), in the case of any tax-
220 
payer which is not a corporation or a partner-
ship, the gross receipts test of section 448(c) 
shall be applied in the same manner as if each 
trade or business of such taxpayer were a cor-
poration or partnership. 
‘‘(B) COORDINATION WITH SECTION 481.— 
Any change in method of accounting made pur-
suant to paragraph (1)(B)(ii) shall be treated 
as initiated by the taxpayer and made with the 
consent of the Secretary. Such change shall be 
effected on a cut-off basis for all similarly clas-
sified contracts entered into on or after the 
year of change.’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2017. 
(2) PRESERVATION
OF
SUSPENSE
ACCOUNT 
RULES WITH RESPECT TO ANY EXISTING SUSPENSE 
ACCOUNTS.—So much of the amendments made by 
subsection (a)(5)(C) as relate to section 447(i) of 
the Internal Revenue Code of 1986 shall not apply 
with respect to any suspense account established
221 
under such section before the date of the enactment 
of this Act. 
(3) EXEMPTION FROM PERCENTAGE COMPLE-
TION
FOR
LONG-TERM
CONTRACTS.—The amend-
ments made by subsection (d) shall apply to con-
tracts entered into after December 31, 2017, in tax-
able years ending after such date. 
SEC. 3203. SMALL BUSINESS EXCEPTION FROM LIMITATION 
ON DEDUCTION OF BUSINESS INTEREST. 
(a) IN GENERAL.—Section 163(j)(2), as amended by 
section 3301, is amended to read as follows: 
‘‘(2) EXEMPTION FOR CERTAIN SMALL BUSI-
NESSES.—In the case of any taxpayer (other than a 
tax shelter prohibited from using the cash receipts 
and disbursements method of accounting under sec-
tion 448(a)(3)) which meets the gross receipts test 
of section 448(c) for any taxable year, paragraph (1) 
shall not apply to such taxpayer for such taxable 
year. In the case of any taxpayer which is not a cor-
poration or a partnership, the gross receipts test of 
section 448(c) shall be applied in the same manner 
as if such taxpayer were a corporation or partner-
ship.’’.
222 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3204. MODIFICATION OF TREATMENT OF S CORPORA-
TION CONVERSIONS TO C CORPORATIONS. 
(a) ADJUSTMENTS ATTRIBUTABLE TO CONVERSION 
FROM S CORPORATION TO C CORPORATION.—Section 481 
is amended by adding at the end the following new sub-
section: 
‘‘(d) ADJUSTMENTS ATTRIBUTABLE TO CONVERSION 
FROM S CORPORATION TO C CORPORATION.— 
‘‘(1) IN GENERAL.—In the case of an eligible 
terminated S corporation, any adjustment required 
by subsection (a)(2) which is attributable to such 
corporation’s revocation described in paragraph 
(2)(A)(ii) shall be taken into account ratably during 
the 6-taxable year period beginning with the year of 
change. 
‘‘(2) 
ELIGIBLE
TERMINATED
S
CORPORA-
TION.—For purposes of this subsection, the term ‘el-
igible terminated S corporation’ means any C cor-
poration— 
‘‘(A) which—
223 
‘‘(i) was an S corporation on the day 
before the date of the enactment of the 
Tax Cuts and Jobs Act, and 
‘‘(ii) during the 2-year period begin-
ning on the date of such enactment makes 
a revocation of its election under section 
1362(a), and 
‘‘(B) the owners of the stock of which, de-
termined on the date such revocation is made, 
are the same owners (and in identical propor-
tions) as on the date of such enactment.’’. 
(b) CASH DISTRIBUTIONS FOLLOWING POST-TERMI-
NATION TRANSITION PERIOD FROM S CORPORATION STA-
TUS.—Section 1371 is amended by adding at the end the 
following new subsection: 
‘‘(f) CASH DISTRIBUTIONS FOLLOWING POST-TERMI-
NATION TRANSITION PERIOD.—In the case of a distribu-
tion of money by an eligible terminated S corporation (as 
defined in section 481(d)) after the post-termination tran-
sition period, the accumulated adjustments account shall 
be allocated to such distribution, and the distribution shall 
be chargeable to accumulated earnings and profits, in the 
same ratio as the amount of such accumulated adjust-
ments account bears to the amount of such accumulated 
earnings and profits.’’.
224 
Subtitle D—Reform of Business- 
related Exclusions, Deductions, etc. 
SEC. 3301. INTEREST. 
(a) IN GENERAL.—Section 163(j) is amended to read 
as follows: 
‘‘(j) LIMITATION ON BUSINESS INTEREST.— 
‘‘(1) IN GENERAL.—In the case of any taxpayer 
for any taxable year, the amount allowed as a deduc-
tion under this chapter for business interest shall 
not exceed the sum of— 
‘‘(A) the business interest income of such 
taxpayer for such taxable year, 
‘‘(B) 30 percent of the adjusted taxable in-
come of such taxpayer for such taxable year, 
plus 
‘‘(C) the floor plan financing interest of 
such taxpayer for such taxable year. 
The amount determined under subparagraph (B) 
(after any increases in such amount under para-
graph (3)(A)(iii)) shall not be less than zero. 
‘‘(2) EXEMPTION FOR CERTAIN SMALL BUSI-
NESSES.—For exemption for certain small busi-
nesses, see the amendment made by section 3203 of 
the Tax Cuts and Jobs Act. 
‘‘(3) APPLICATION TO PARTNERSHIPS, ETC.—
225 
‘‘(A) IN
GENERAL.—In the case of any 
partnership— 
‘‘(i) this subsection shall be applied at 
the partnership level and any deduction for 
business interest shall be taken into ac-
count in determining the non-separately 
stated taxable income or loss of the part-
nership, 
‘‘(ii) the adjusted taxable income of 
each partner of such partnership shall be 
determined without regard to such part-
ner’s distributive share of the non-sepa-
rately stated taxable income or loss of such 
partnership, and 
‘‘(iii) the amount determined under 
paragraph (1)(B) with respect to each 
partner of such partnership shall be in-
creased by such partner’s distributive 
share of such partnership’s excess amount. 
‘‘(B) EXCESS AMOUNT.—The term ‘excess 
amount’ means, with respect to any partner-
ship, the excess (if any) of— 
‘‘(i) 30 percent of the adjusted taxable 
income of the partnership, over
226 
‘‘(ii) the amount (if any) by which the 
business interest of the partnership, re-
duced by floor plan financing interest, ex-
ceeds the business interest income of the 
partnership. 
‘‘(C) APPLICATION TO S CORPORATIONS.— 
Rules similar to the rules of subparagraphs (A) 
and (B) shall apply with respect to any S cor-
poration and its shareholders. 
‘‘(4) BUSINESS
INTEREST.—For purposes of 
this subsection, the term ‘business interest’ means 
any interest paid or accrued on indebtedness prop-
erly allocable to a trade or business. Such term shall 
not include investment interest (within the meaning 
of subsection (d)). 
‘‘(5) BUSINESS INTEREST INCOME.—For pur-
poses of this subsection, the term ‘business interest 
income’ means the amount of interest includible in 
the gross income of the taxpayer for the taxable year 
which is properly allocable to a trade or business. 
Such term shall not include investment income 
(within the meaning of subsection (d)). 
‘‘(6) ADJUSTED TAXABLE INCOME.—For pur-
poses of this subsection, the term ‘adjusted taxable 
income’ means the taxable income of the taxpayer—
227 
‘‘(A) computed without regard to— 
‘‘(i) any item of income, gain, deduc-
tion, or loss which is not properly allocable 
to a trade or business, 
‘‘(ii) any business interest or business 
interest income, 
‘‘(iii) the amount of any net operating 
loss deduction under section 172, and 
‘‘(iv) any deduction allowable for de-
preciation, amortization, or depletion, and 
‘‘(B) computed with such other adjust-
ments as the Secretary may provide. 
‘‘(7) TRADE OR BUSINESS.—For purposes of 
this subsection, the term ‘trade or business’ shall not 
include— 
‘‘(A) the trade or business of performing 
services as an employee, 
‘‘(B) a real property trade or business (as 
such term is defined in section 469(c)(7)(C)), 
or 
‘‘(C) the trade or business of the fur-
nishing or sale of— 
‘‘(i) electrical energy, water, or sewage 
disposal services,
228 
‘‘(ii) gas or steam through a local dis-
tribution system, or 
‘‘(iii) transportation of gas or steam 
by pipeline, 
if the rates for such furnishing or sale, as the 
case may be, have been established or approved 
by a State or political subdivision thereof, by 
any agency or instrumentality of the United 
States, or by a public service or public utility 
commission or other similar body of any State 
or political subdivision thereof. 
‘‘(8) CARRYFORWARD OF DISALLOWED INTER-
EST.—For carryforward of interest disallowed under 
paragraph (1), see subsection (o). 
‘‘(9) FLOOR PLAN FINANCING INTEREST DE-
FINED.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘floor plan 
financing interest’ means interest paid or ac-
crued on floor plan financing indebtedness. 
‘‘(B) FLOOR PLAN FINANCING INDEBTED-
NESS.—The term ‘floor plan financing indebt-
edness’ means indebtedness— 
‘‘(i) used to finance the acquisition of 
motor vehicles held for sale to retail cus-
tomers, and
229 
‘‘(ii) secured by the inventory so ac-
quired. 
‘‘(C) MOTOR VEHICLE.—The term ‘motor 
vehicle’ means a motor vehicle that is any of 
the following: 
‘‘(i) An automobile. 
‘‘(ii) A truck. 
‘‘(iii) A recreational vehicle. 
‘‘(iv) A motorcycle. 
‘‘(v) A boat. 
‘‘(vi) Farm machinery or equipment. 
‘‘(vii) 
Construction 
machinery 
or 
equipment.’’. 
(b) CARRYFORWARD OF DISALLOWED BUSINESS IN-
TEREST.—Section 163, after amendment by section 
4302(a) and before amendment by section 4302(b), is 
amended by inserting after subsection (n) the following 
new subsection: 
‘‘(o) CARRYFORWARD OF DISALLOWED BUSINESS IN-
TEREST.—The amount of any business interest not al-
lowed as a deduction for any taxable year by reason of 
subsection (j) shall be treated as business interest paid 
or accrued in the succeeding taxable year. Business inter-
est paid or accrued in any taxable year (determined with-
out regard to the preceding sentence) shall not be carried
230 
past the 5th taxable year following such taxable year, de-
termined by treating business interest as allowed as a de-
duction on a first-in, first-out basis.’’. 
(c) TREATMENT
OF
CARRYFORWARD
OF
DIS-
ALLOWED BUSINESS INTEREST IN CERTAIN CORPORATE 
ACQUISITIONS.— 
(1) IN GENERAL.—Section 381(c) is amended 
by inserting after paragraph (19) the following new 
paragraph: 
‘‘(20) CARRYFORWARD OF DISALLOWED INTER-
EST.—The carryover of disallowed interest described 
in section 163(o) to taxable years ending after the 
date of distribution or transfer.’’. 
(2) APPLICATION
OF
LIMITATION.—Section 
382(d) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(3) APPLICATION TO CARRYFORWARD OF DIS-
ALLOWED
INTEREST.—The term ‘pre-change loss’ 
shall include any carryover of disallowed interest de-
scribed in section 163(o) under rules similar to the 
rules of paragraph (1).’’. 
(3) 
CONFORMING
AMENDMENT.—Section 
382(k)(1) is amended by inserting after the first 
sentence the following: ‘‘Such term shall include any
231 
corporation entitled to use a carryforward of dis-
allowed interest described in section 381(c)(20).’’ 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3302. MODIFICATION OF NET OPERATING LOSS DE-
DUCTION. 
(a) INDEFINITE CARRYFORWARD
OF NET OPER-
ATING LOSSES.—Section 172(b)(1)(A)(ii) is amended by 
striking ‘‘to each of the 20 taxable years’’ and inserting 
‘‘to each taxable year’’. 
(b) REPEAL OF NET OPERATING LOSS CARRYBACKS 
OTHER THAN 1-YEAR CARRYBACK OF ELIGIBLE DIS-
ASTER LOSSES.— 
(1) IN
GENERAL.—Section 172(b)(1)(A)(i) is 
amended to read as follows: 
‘‘(i) in the case of any portion of a net 
operating loss for the taxable year which is 
an eligible disaster loss with respect to the 
taxpayer, shall be a net operating loss 
carryback to the taxable year preceding the 
taxable year of such loss, and’’. 
(2) CONFORMING AMENDMENTS.—
232 
(A) Section 172(b)(1) is amended by strik-
ing subparagraphs (B) through (F) and insert-
ing the following: 
‘‘(B) ELIGIBLE DISASTER LOSS.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(i), the term ‘eligible dis-
aster loss’ means— 
‘‘(I) in the case of a taxpayer 
which is a small business, net oper-
ating losses attributable to federally 
declared disasters (as defined by sec-
tion 165(i)(5)), and 
‘‘(II) in the case of a taxpayer 
engaged in the trade or business of 
farming, net operating losses attrib-
utable to such federally declared dis-
asters. 
‘‘(ii) SMALL BUSINESS.—For purposes 
of this subparagraph, the term ‘small busi-
ness’ means a corporation or partnership 
which meets the gross receipts test of sec-
tion 448(c) (determined by substituting 
‘$5,000,000’ for ‘$25,000,000’ each place 
it appears therein) for the taxable year in 
which the loss arose (or, in the case of a
233 
sole proprietorship, which would meet such 
test if such proprietorship were a corpora-
tion). 
‘‘(iii) TRADE OR BUSINESS OF FARM-
ING.—For purposes of this subparagraph, 
the trade or business of farming shall in-
clude the trade or business of— 
‘‘(I) operating a nursery or sod 
farm, or 
‘‘(II) the raising or harvesting of 
trees bearing fruit, nuts, or other 
crops, or ornamental trees. 
For purposes of subclause (II), an ever-
green tree which is more than 6 years old 
at the time severed from the roots shall 
not be treated as an ornamental tree.’’. 
(B) Section 172 is amended by striking 
subsections (f), (g), and (h). 
(c) LIMITATION OF NET OPERATING LOSS TO 90 
PERCENT OF TAXABLE INCOME.— 
(1) IN GENERAL.—Section 172(a) is amended 
to read as follows: 
‘‘(a) DEDUCTION ALLOWED.—There shall be allowed 
as a deduction for the taxable year an amount equal to 
the lesser of—
234 
‘‘(1) the aggregate of the net operating loss 
carryovers to such year, plus the net operating loss 
carrybacks to such year, or 
‘‘(2) 90 percent of taxable income computed 
without regard to the deduction allowable under this 
section. 
For purposes of this subtitle, the term ‘net operating loss 
deduction’ means the deduction allowed by this sub-
section.’’. 
(2) 
COORDINATION
OF
LIMITATION
WITH 
CARRYBACKS AND CARRYOVERS.—Section 172(b)(2) 
is amended by striking ‘‘shall be computed—’’ and 
all that follows and inserting ‘‘shall— 
‘‘(A) be computed with the modifications 
specified in subsection (d) other than para-
graphs (1), (4), and (5) thereof, and by deter-
mining the amount of the net operating loss de-
duction without regard to the net operating loss 
for the loss year or for any taxable year there-
after, 
‘‘(B) not be considered to be less than 
zero, and 
‘‘(C) not exceed the amount determined 
under subsection (a)(2) for such prior taxable 
year.’’.
235 
(3) 
CONFORMING
AMENDMENT.—Section 
172(d)(6) is amended by striking ‘‘and’’ at the end 
of subparagraph (A), by striking the period at the 
end of subparagraph (B) and inserting ‘‘; and’’, and 
by adding at the end the following new subpara-
graph: 
‘‘(C) subsection (a)(2) shall be applied by 
substituting ‘real estate investment trust tax-
able income (as defined in section 857(b)(2) but 
without regard to the deduction for dividends 
paid (as defined in section 561))’ for ‘taxable 
income’.’’. 
(d) ANNUAL INCREASE OF INDEFINITE CARRYOVER 
AMOUNTS.—Section 172(b) is amended by redesignating 
paragraph (3) as paragraph (4) and by inserting after 
paragraph (2) the following new paragraph: 
‘‘(3) ANNUAL INCREASE OF INDEFINITE CARRY-
OVER AMOUNTS.—For purposes of paragraph (2)— 
‘‘(A) the amount of any indefinite net op-
erating loss which is carried to the next suc-
ceeding taxable year after the loss year (within 
the meaning of paragraph (2)) shall be in-
creased by an amount equal to— 
‘‘(i) the amount of the loss which may 
be so carried over to such succeeding tax-
236 
able year (determined without regard to 
this paragraph), multiplied by 
‘‘(ii) the sum of— 
‘‘(I) the annual Federal short- 
term rate (determined under section 
1274(d)) for the last month ending 
before the beginning of such taxable 
year, plus 
‘‘(II) 4 percentage points, and 
‘‘(B) the amount of any indefinite net op-
erating loss which is carried to any succeeding 
taxable year (after such next succeeding taxable 
year) shall be an amount equal to— 
‘‘(i) the excess of— 
‘‘(I) the amount of the loss car-
ried to the prior taxable year (after 
any increase under this paragraph 
with respect to such amount), over 
‘‘(II) the amount by which such 
loss was reduced under paragraph (2) 
by reason of the taxable income for 
such prior taxable year, multiplied by 
‘‘(ii) a percentage equal to 100 per-
cent plus the percentage determined under
237 
subparagraph (A)(ii) with respect to such 
succeeding taxable year. 
For purposes of the preceding sentence, the 
term ‘indefinite net operating loss’ means any 
net operating loss arising in a taxable year be-
ginning after December 31, 2017.’’. 
(e) EFFECTIVE DATE.— 
(1) CARRYFORWARDS AND CARRYBACKS.—The 
amendments made by subsections (a) and (b) shall 
apply to net operating losses arising in taxable years 
beginning after December 31, 2017. 
(2) NET OPERATING LOSS LIMITED TO 90 PER-
CENT
OF
TAXABLE
INCOME.—The amendments 
made by subsection (c) shall apply to taxable years 
beginning after December 31, 2017. 
(3) 
ANNUAL
INCREASE
IN
CARRYOVER 
AMOUNTS.—The amendments made by subsection 
(d) shall apply to amounts carried to taxable years 
beginning after December 31, 2017. 
(4) 
SPECIAL
RULE
FOR
NET
DISASTER 
LOSSES.—Notwithstanding 
paragraph 
(1), 
the 
amendments made by subsection (b) shall not apply 
to the portion of the net operating loss for any tax-
able year which is a net disaster loss to which sec-
238 
tion 504(b) of the Disaster Tax Relief and Airport 
and Airway Extension Act of 2017 applies. 
SEC. 3303. LIKE-KIND EXCHANGES OF REAL PROPERTY. 
(a) IN GENERAL.—Section 1031(a)(1) is amended by 
striking ‘‘property’’ each place it appears and inserting 
‘‘real property’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1031(a) is amend-
ed to read as follows: 
‘‘(2) EXCEPTION FOR REAL PROPERTY HELD 
FOR SALE.—This subsection shall not apply to any 
exchange of real property held primarily for sale.’’. 
(2) Section 1031 is amended by striking sub-
sections (e) and (i). 
(3) Section 1031, as amended by paragraph 
(2), is amended by inserting after subsection (d) the 
following new subsection: 
‘‘(e) APPLICATION TO CERTAIN PARTNERSHIPS.— 
For purposes of this section, an interest in a partnership 
which has in effect a valid election under section 761(a) 
to be excluded from the application of all of subchapter 
K shall be treated as an interest in each of the assets of 
such partnership and not as an interest in a partnership.’’. 
(4) Section 1031(h) is amended to read as fol-
lows:
239 
‘‘(h) SPECIAL RULES FOR FOREIGN REAL PROP-
ERTY.—Real property located in the United States and 
real property located outside the United States are not 
property of a like kind.’’. 
(5) The heading of section 1031 is amended by 
striking ‘‘PROPERTY’’ and inserting ‘‘REAL PROP-
ERTY’’. 
(6) The table of sections for part III of sub-
chapter O of chapter 1 is amended by striking the 
item relating to section 1031 and inserting the fol-
lowing new item: 
‘‘Sec. 1031. Exchange of real property held for productive use or investment.’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to exchanges completed after 
December 31, 2017. 
(2) 
TRANSITION
RULE.—The 
amendments 
made by this section shall not apply to any exchange 
if— 
(A) the property disposed of by the tax-
payer in the exchange is disposed of on or be-
fore December 31 2017, or 
(B) the property received by the taxpayer 
in the exchange is received on or before Decem-
ber 31, 2017.
240 
SEC. 3304. REVISION OF TREATMENT OF CONTRIBUTIONS 
TO CAPITAL. 
(a) INCLUSION OF CONTRIBUTIONS TO CAPITAL.— 
Part II of subchapter B of chapter 1 is amended by insert-
ing after section 75 the following new section: 
‘‘SEC. 76. CONTRIBUTIONS TO CAPITAL. 
‘‘(a) IN GENERAL.—Gross income includes any con-
tribution to the capital of any entity. 
‘‘(b) TREATMENT OF CONTRIBUTIONS IN EXCHANGE 
FOR STOCK, ETC.— 
‘‘(1) IN GENERAL.—In the case of any con-
tribution of money or other property to a corpora-
tion in exchange for stock of such corporation— 
‘‘(A) such contribution shall not be treated 
for purposes of subsection (a) as a contribution 
to the capital of such corporation (and shall not 
be includible in the gross income of such cor-
poration), and 
‘‘(B) no gain or loss shall be recognized to 
such corporation upon the issuance of such 
stock. 
‘‘(2) TREATMENT
LIMITED
TO
VALUE
OF 
STOCK.—For purposes of this subsection, a contribu-
tion of money or other property to a corporation 
shall be treated as being in exchange for stock of 
such corporation only to the extent that the fair
241 
market value of such money and other property does 
not exceed the fair market value of such stock. 
‘‘(3) APPLICATION TO ENTITIES OTHER THAN 
CORPORATIONS.—In the case of any entity other 
than a corporation, rules similar to the rules of 
paragraphs (1) and (2) shall apply in the case of 
any contribution of money or other property to such 
entity in exchange for any interest in such entity. 
‘‘(c) TREASURY STOCK TREATED AS STOCK.—Any 
reference in this section to stock shall be treated as includ-
ing a reference to treasury stock.’’. 
(b) BASIS OF CORPORATION IN CONTRIBUTED PROP-
ERTY.— 
(1) CONTRIBUTIONS TO CAPITAL.—Subsection 
(c) of section 362 is amended to read as follows: 
‘‘(c) CONTRIBUTIONS
TO
CAPITAL.—If property 
other than money is transferred to a corporation as a con-
tribution to the capital of such corporation (within the 
meaning of section 76) then the basis of such property 
shall be the greater of— 
‘‘(1) the basis determined in the hands of the 
transferor, increased by the amount of gain recog-
nized to the transferor on such transfer, or
242 
‘‘(2) the amount included in gross income by 
such corporation under section 76 with respect to 
such contribution.’’. 
(2) 
CONTRIBUTIONS
IN
EXCHANGE
FOR 
STOCK.—Paragraph (2) of section 362(a) is amend-
ed by striking ‘‘contribution to capital’’ and insert-
ing ‘‘contribution in exchange for stock of such cor-
poration (determined under rules similar to the rules 
of paragraphs (2) and (3) of section 76(b))’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 108(e) is amended by striking para-
graph (6). 
(2) Part III of subchapter B of chapter 1 is 
amended by striking section 118 (and by striking 
the item relating to such section in the table of sec-
tions for such part). 
(3) The table of sections for part II of sub-
chapter B of chapter 1 is amended by inserting after 
the item relating to section 75 the following new 
item: 
‘‘Sec. 76. Contributions to capital.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made, and trans-
actions entered into, after the date of the enactment of 
this Act.
243 
SEC. 3305. REPEAL OF DEDUCTION FOR LOCAL LOBBYING 
EXPENSES. 
(a) IN GENERAL.—Section 162(e) is amended by 
striking paragraphs (2) and (7) and by redesignating 
paragraphs (3), (4), (5), (6), and (8) as paragraphs (2), 
(3), (4), (5), and (6), respectively. 
(b) 
CONFORMING
AMENDMENT.—Section 
6033(e)(1)(B)(ii) is amended by striking ‘‘section 
162(e)(5)(B)(ii)’’ 
and 
inserting 
‘‘section 
162(e)(4)(B)(ii)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2017. 
SEC. 3306. REPEAL OF DEDUCTION FOR INCOME ATTRIB-
UTABLE TO DOMESTIC PRODUCTION ACTIVI-
TIES. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by striking section 199 (and by striking 
the item relating to such section in the table of sections 
for such part). 
(b) CONFORMING AMENDMENTS.— 
(1) 
Sections 
74(d)(2)(B), 
86(b)(2)(A), 
137(b)(3)(A), 219(g)(3)(A)(ii), and 246(b)(1) are 
each amended by striking ‘‘199,’’. 
(2) Section 170(b)(2)(D), as amended by the 
preceding provisions of this Act, is amended by
244 
striking clause (iv), by redesignating clause (v) as 
clause (iv), and by inserting ‘‘and’’ at the end of 
clause (iii). 
(3) Section 172(d) is amended by striking para-
graph (7). 
(4) Section 613(a) is amended by striking ‘‘and 
without the deduction under section 199’’. 
(5) Section 613A(d)(1) is amended by striking 
subparagraph (B) and by redesignating subpara-
graphs (C), (D), and (E) as subparagraphs (B), (C), 
and (D), respectively. 
(6) Section 1402(a) is amended by adding 
‘‘and’’ at the end of paragraph (15) and by striking 
paragraph (16). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3307. ENTERTAINMENT, ETC. EXPENSES. 
(a) DENIAL OF DEDUCTION.—Subsection (a) of sec-
tion 274 is amended to read as follows: 
‘‘(a) ENTERTAINMENT, AMUSEMENT, RECREATION, 
AND OTHER FRINGE BENEFITS .— 
‘‘(1) IN GENERAL.—No deduction otherwise al-
lowable under this chapter shall be allowed for
245 
amounts paid or incurred for any of the following 
items: 
‘‘(A) ACTIVITY.—With respect to an activ-
ity which is of a type generally considered to 
constitute entertainment, amusement, or recre-
ation. 
‘‘(B) MEMBERSHIP
DUES.—With respect 
to membership in any club organized for busi-
ness, pleasure, recreation or other social pur-
poses. 
‘‘(C) AMENITY.—With respect to a de 
minimis fringe (as defined in section 132(e)(1)) 
that is primarily personal in nature and involv-
ing property or services that are not directly re-
lated to the taxpayer’s trade or business. 
‘‘(D) FACILITY.—With respect to a facility 
or portion thereof used in connection with an 
activity referred to in subparagraph (A), mem-
bership dues or similar amounts referred to in 
subparagraph (B), or an amenity referred to in 
subparagraph (C). 
‘‘(E) 
QUALIFIED
TRANSPORTATION 
FRINGE AND PARKING FACILITY.—Which is a 
qualified transportation fringe (as defined in 
section 132(f)) or which is a parking facility
246 
used in connection with qualified parking (as 
defined in section 132(f)(5)(C)). 
‘‘(F) ON-PREMISES ATHLETIC FACILITY.— 
Which is an on-premises athletic facility as de-
fined in section 132(j)(4)(B). 
‘‘(2) SPECIAL RULES.—For purposes of apply-
ing paragraph (1), an activity described in section 
212 shall be treated as a trade or business. 
‘‘(3) REGULATIONS.—Under the regulations 
prescribed to carry out this section, the Secretary 
shall include regulations— 
‘‘(A) defining entertainment, amenities, 
recreation, amusement, and facilities for pur-
poses of this subsection, 
‘‘(B) providing for the appropriate alloca-
tion of depreciation and other costs with respect 
to facilities used for parking or for on-premises 
athletic facilities, and 
‘‘(C) specifying arrangements a primary 
purpose of which is the avoidance of this sub-
section.’’. 
(b) EXCEPTION FOR CERTAIN EXPENSES INCLUD-
IBLE IN INCOME OF RECIPIENT.—
247 
(1) EXPENSES TREATED AS COMPENSATION.— 
Paragraph (2) of section 274(e) is amended to read 
as follows: 
‘‘(2) EXPENSES TREATED AS COMPENSATION.— 
Expenses for goods, services, and facilities, to the 
extent that the expenses do not exceed the amount 
of the expenses which are treated by the taxpayer, 
with respect to the recipient of the entertainment, 
amusement, or recreation, as compensation to an 
employee on the taxpayer’s return of tax under this 
chapter and as wages to such employee for purposes 
of chapter 24 (relating to withholding of income tax 
at source on wages).’’. 
(2) EXPENSES INCLUDIBLE IN INCOME OF PER-
SONS WHO ARE NOT EMPLOYEES.—Paragraph (9) of 
section 274(e) is amended by striking ‘‘to the extent 
that the expenses’’ and inserting ‘‘to the extent that 
the expenses do not exceed the amount of the ex-
penses that’’. 
(c) EXCEPTIONS
FOR REIMBURSED EXPENSES.— 
Paragraph (3) of section 274(e) is amended to read as 
follows: 
‘‘(3) REIMBURSED EXPENSES.— 
‘‘(A) IN GENERAL.—Expenses paid or in-
curred by the taxpayer, in connection with the
248 
performance by him of services for another per-
son (whether or not such other person is the 
taxpayer’s employer), under a reimbursement or 
other expense allowance arrangement with such 
other person, but this paragraph shall apply— 
‘‘(i) where the services are performed 
for an employer, only if the employer has 
not treated such expenses in the manner 
provided in paragraph (2), or 
‘‘(ii) where the services are performed 
for a person other than an employer, only 
if the taxpayer accounts (to the extent pro-
vided by subsection (d)) to such person. 
‘‘(B) EXCEPTION.—Except as provided by 
the Secretary, subparagraph (A) shall not 
apply— 
‘‘(i) in the case of an arrangement in 
which the person other than the employer 
is 
an 
entity 
described 
in 
section 
168(h)(2)(A), or 
‘‘(ii) to any other arrangement des-
ignated by the Secretary as having the ef-
fect of avoiding the limitation under sub-
paragraph (A).’’.
249 
(d) 50 PERCENT LIMITATION ON MEALS AND EN-
TERTAINMENT EXPENSES.—Subsection (n) of section 274 
is amended to read as follows: 
‘‘(n) LIMITATION ON CERTAIN EXPENSES.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
deduction under this chapter for any expense for 
food or beverages (pursuant to subsection (e)(1)) or 
business meals (pursuant to subsection (k)(1)) shall 
not exceed 50 percent of the amount of such expense 
or item which would (but for this paragraph) be al-
lowable as a deduction under this chapter. 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 
apply to any expense if— 
‘‘(A) such expense is described in para-
graph (2), (3), (6), (7), or (8) of subsection (e), 
‘‘(B) in the case of an expense for food or 
beverages, such expense is excludable from the 
gross income of the recipient under section 132 
by reason of subsection (e) thereof (relating to 
de minimis fringes) or under section 119 (relat-
ing to meals and lodging furnished for conven-
ience of employer), or 
‘‘(C) in the case of an employer who pays 
or reimburses moving expenses of an employee,
250 
such expenses are includible in the income of 
the employee under section 82. 
‘‘(3) SPECIAL RULE FOR INDIVIDUALS SUBJECT 
TO FEDERAL HOURS OF SERVICE.—In the case of 
any expenses for food or beverages consumed while 
away from home (within the meaning of section 
162(a)(2)) by an individual during, or incident to, 
the period of duty subject to the hours of service 
limitations of the Department of Transportation, 
paragraph (1) shall be applied by substituting ‘80 
percent’ for ‘50 percent’.’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Section 274(d) is amended— 
(A) by striking paragraph (2) and redesig-
nating paragraphs (3) and (4) as paragraphs 
(2) and (3), respectively, and 
(B) in the flush material following para-
graph (3) (as so redesignated)— 
(i) by striking ‘‘, entertainment, 
amusement, recreation, or’’ in item (B), 
and 
(ii) by striking ‘‘(D) the business rela-
tionship to the taxpayer of persons enter-
tained, using the facility or property, or re-
ceiving the gift’’ and inserting ‘‘(D) the
251 
business relationship to the taxpayer of the 
person receiving the benefit’’. 
(2) Section 274(e) is amended by striking para-
graph (4) and redesignating paragraphs (5), (6), 
(7), (8), and (9) as paragraphs (4), (5), (6), (7), 
and (8), respectively. 
(3) Section 274(k)(2)(A) is amended by strik-
ing ‘‘(4), (7), (8), or (9)’’ and inserting ‘‘(6), (7), or 
(8)’’. 
(4) Section 274 is amended by striking sub-
section (l). 
(5) Section 274(m)(1)(B)(ii) is amended by 
striking ‘‘(4), (7), (8), or (9)’’ and inserting ‘‘(6), 
(7), or (8)’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2017. 
SEC. 3308. UNRELATED BUSINESS TAXABLE INCOME IN-
CREASED BY AMOUNT OF CERTAIN FRINGE 
BENEFIT EXPENSES FOR WHICH DEDUCTION 
IS DISALLOWED. 
(a) IN GENERAL.—Section 512(a) is amended by 
adding at the end the following new paragraph: 
‘‘(6) INCREASE IN UNRELATED BUSINESS TAX-
ABLE INCOME BY DISALLOWED FRINGE.—Unrelated
252 
business taxable income of an organization shall be 
increased by any amount for which a deduction is 
not allowable under this chapter by reason of section 
274 and which is paid or incurred by such organiza-
tion for any qualified transportation fringe (as de-
fined in section 132(f)), any parking facility used in 
connection with qualified parking (as defined in sec-
tion 132(f)(5)(C)), or any on-premises athletic facil-
ity (as defined in section 132(j)(4)(B)). The pre-
ceding sentence shall not apply to the extent the 
amount paid or incurred is directly connected with 
an unrelated trade or business which is regularly 
carried on by the organization. The Secretary may 
issue such regulations or other guidance as may be 
necessary or appropriate to carry out the purposes 
of this paragraph, including regulations or other 
guidance providing for the appropriate allocation of 
depreciation and other costs with respect to facilities 
used for parking or for on-premises athletic facili-
ties. 
’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or incurred after 
December 31, 2017.
253 
SEC. 3309. LIMITATION ON DEDUCTION FOR FDIC PRE-
MIUMS. 
(a) IN GENERAL.—Section 162 is amended by redes-
ignating subsection (q) as subsection (r) and by inserting 
after subsection (p) the following new subsection: 
‘‘(q) DISALLOWANCE OF FDIC PREMIUMS PAID BY 
CERTAIN LARGE FINANCIAL INSTITUTIONS.— 
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for the applicable percentage of any FDIC 
premium paid or incurred by the taxpayer. 
‘‘(2) EXCEPTION FOR SMALL INSTITUTIONS.— 
Paragraph (1) shall not apply to any taxpayer for 
any taxable year if the total consolidated assets of 
such taxpayer (determined as of the close of such 
taxable year) do not exceed $10,000,000,000. 
‘‘(3) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means, with respect to any taxpayer for any taxable 
year, the ratio (expressed as a percentage but not 
greater than 100 percent) which— 
‘‘(A) the excess of— 
‘‘(i) the total consolidated assets of 
such taxpayer (determined as of the close 
of such taxable year), over 
‘‘(ii) $10,000,000,000, bears to 
‘‘(B) $40,000,000,000.
254 
‘‘(4) FDIC PREMIUMS.—For purposes of this 
subsection, the term ‘FDIC premium’ means any as-
sessment imposed under section 7(b) of the Federal 
Deposit Insurance Act (12 U.S.C. 1817(b)). 
‘‘(5) TOTAL CONSOLIDATED ASSETS.—For pur-
poses of this subsection, the term ‘total consolidated 
assets’ has the meaning given such term under sec-
tion 165 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (12 U.S.C. 5365). 
‘‘(6) AGGREGATION RULE.— 
‘‘(A) IN
GENERAL.—Members of an ex-
panded affiliated group shall be treated as a 
single taxpayer for purposes of applying this 
subsection. 
‘‘(B) EXPANDED
AFFILIATED
GROUP.— 
For purposes of this paragraph, the term ‘ex-
panded affiliated group’ means an affiliated 
group as defined in section 1504(a), deter-
mined— 
‘‘(i) by substituting ‘more than 50 
percent’ for ‘at least 80 percent’ each place 
it appears, and 
‘‘(ii) without regard to paragraphs (2) 
and (3) of section 1504(b).
255 
A partnership or any other entity (other than a 
corporation) shall be treated as a member of an 
expanded affiliated group if such entity is con-
trolled 
(within 
the 
meaning 
of 
section 
954(d)(3)) by members of such group (includ-
ing any entity treated as a member of such 
group by reason of this sentence).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 3310. REPEAL OF ROLLOVER OF PUBLICLY TRADED 
SECURITIES GAIN INTO SPECIALIZED SMALL 
BUSINESS INVESTMENT COMPANIES. 
(a) IN GENERAL.—Part III of subchapter O of chap-
ter 1 is amended by striking section 1044 (and by striking 
the item relating to such section in the table of sections 
of such part). 
(b) 
CONFORMING
AMENDMENTS.—Section 
1016(a)(23) is amended— 
(1) by striking ‘‘1044,’’, and 
(2) by striking ‘‘1044(d),’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales after December 31, 2017.
256 
SEC. 3311. CERTAIN SELF-CREATED PROPERTY NOT TREAT-
ED AS A CAPITAL ASSET. 
(a) PATENTS, ETC.—Section 1221(a)(3) is amended 
by inserting ‘‘a patent, invention, model or design (wheth-
er or not patented), a secret formula or process,’’ before 
‘‘a copyright’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
1231(b)(1)(C) is amended by inserting ‘‘a patent, inven-
tion, model or design (whether or not patented), a secret 
formula or process,’’ before ‘‘a copyright’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions after December 31, 
2017. 
SEC. 3312. REPEAL OF SPECIAL RULE FOR SALE OR EX-
CHANGE OF PATENTS. 
(a) IN GENERAL.—Part IV of subchapter P of chap-
ter 1 is amended by striking section 1235 (and by striking 
the item relating to such section in the table of sections 
of such part). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 483(d) is amended by striking para-
graph (4). 
(2) Section 901(l)(5) is amended by striking 
‘‘without regard to section 1235 or any similar rule’’ 
and inserting ‘‘without regard to any provision 
which treats a disposition as a sale or exchange of
257 
a capital asset held for more than 1 year or any 
similar provision’’. 
(3) Section 1274(c)(3) is amended by striking 
subparagraph (E) and redesignating subparagraph 
(F) as subparagraph (E). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions after December 31, 
2017. 
SEC. 3313. REPEAL OF TECHNICAL TERMINATION OF PART-
NERSHIPS. 
(a) IN GENERAL.—Paragraph (1) of section 708(b) 
is amended— 
(1) by striking ‘‘, or’’ at the end of subpara-
graph (A) and all that follows and inserting a pe-
riod, and 
(2) by striking ‘‘only if—’’ and all that follows 
through ‘‘no part of any business’’ and inserting the 
following: ‘‘only if no part of any business’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to partnership taxable years begin-
ning after December 31, 2017.
258 
SEC. 3314. RECHARACTERIZATION OF CERTAIN GAINS IN 
THE CASE OF PARTNERSHIP PROFITS INTER-
ESTS HELD IN CONNECTION WITH PERFORM-
ANCE OF INVESTMENT SERVICES. 
(a) IN GENERAL.—Part IV of subchapter O of chap-
ter 1 is amended— 
(1) by redesignating section 1061 as section 
1062, and 
(2) by inserting after section 1060 the following 
new section: 
‘‘SEC. 1061. PARTNERSHIP INTERESTS HELD IN CONNEC-
TION WITH PERFORMANCE OF SERVICES. 
‘‘(a) IN GENERAL.—If one or more applicable part-
nership interests are held by a taxpayer at any time during 
the taxable year, the excess (if any) of— 
‘‘(1) the taxpayer’s net long-term capital gain 
with respect to such interests for such taxable year, 
over 
‘‘(2) the taxpayer’s net long-term capital gain 
with respect to such interests for such taxable year 
computed by applying paragraphs (3) and (4) of sec-
tions 1222 by substituting ‘3 years’ for ‘1 year’, 
shall be treated as short-term capital gain. 
‘‘(b) SPECIAL RULE.—To the extent provided by the 
Secretary, subsection (a) shall not apply to income or gain
259 
attributable to any asset not held for portfolio investment 
on behalf of third party investors. 
‘‘(c) APPLICABLE PARTNERSHIP INTEREST.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—Except as provided in this 
paragraph or paragraph (4), the term ‘applicable 
partnership interest’ means any interest in a part-
nership which, directly or indirectly, is transferred to 
(or is held by) the taxpayer in connection with the 
performance of substantial services by the taxpayer, 
or any other related person, in any applicable trade 
or business. The previous sentence shall not apply to 
an interest held by a person who is employed by an-
other entity that is conducting a trade or business 
(other than an applicable trade or business) and 
only provides services to such other entity. 
‘‘(2) APPLICABLE TRADE OR BUSINESS.—The 
term ‘applicable trade or business’ means any activ-
ity conducted on a regular, continuous, and substan-
tial basis which, regardless of whether the activity is 
conducted in one or more entities, consists, in whole 
or in part, of— 
‘‘(A) raising or returning capital, and 
‘‘(B) either—
260 
‘‘(i) investing in (or disposing of) 
specified assets (or identifying specified as-
sets for such investing or disposition), or 
‘‘(ii) developing specified assets. 
‘‘(3) SPECIFIED
ASSET.—The term ‘specified 
asset’ means securities (as defined in section 
475(c)(2) without regard to the last sentence there-
of), commodities (as defined in section 475(e)(2)), 
real estate held for rental or investment, cash or 
cash equivalents, options or derivative contracts with 
respect to any of the foregoing, and an interest in 
a partnership to the extent of the partnership’s pro-
portionate interest in any of the foregoing. 
‘‘(4) EXCEPTIONS.—The term ‘applicable part-
nership interest’ shall not include— 
‘‘(A) any interest in a partnership directly 
or indirectly held by a corporation, or 
‘‘(B) any capital interest in the partner-
ship which provides the taxpayer with a right to 
share in partnership capital commensurate 
with— 
‘‘(i) the amount of capital contributed 
(determined at the time of receipt of such 
partnership interest), or
261 
‘‘(ii) the value of such interest subject 
to tax under section 83 upon the receipt or 
vesting of such interest. 
‘‘(5) THIRD PARTY INVESTOR.—The term ‘third 
party investor’ means a person who— 
‘‘(A) holds an interest in the partnership 
which does not constitute property held in con-
nection with an applicable trade or business; 
and 
‘‘(B) is not (and has not been) actively en-
gaged, and is (and was) not related to a person 
so engaged, in (directly or indirectly) providing 
substantial services described in paragraph (1) 
for such partnership or any applicable trade or 
business. 
‘‘(d) TRANSFER OF APPLICABLE PARTNERSHIP IN-
TEREST TO RELATED PERSON.— 
‘‘(1) IN GENERAL.—If a taxpayer transfers any 
applicable partnership interest, directly or indirectly, 
to a person related to the taxpayer, the taxpayer 
shall include in gross income (as short term capital 
gain) the excess (if any) of— 
‘‘(A) so much of the taxpayer’s long-term 
capital gains with respect to such interest for 
such taxable year attributable to the sale or ex-
262 
change of any asset held for not more than 3 
years as is allocable to such interest, over 
‘‘(B) any amount treated as short term 
capital gain under subsection (a) with respect 
to the transfer of such interest. 
‘‘(2) RELATED PERSON.—For purposes of this 
paragraph, a person is related to the taxpayer if— 
‘‘(A) the person is a member of the tax-
payer’s family within the meaning of section 
318(a)(1), or 
‘‘(B) the person performed a service within 
the current calendar year or the preceding three 
calendar years in any applicable trade or busi-
ness in which or for which the taxpayer per-
formed a service. 
‘‘(e) REPORTING.—The Secretary shall require such 
reporting (at the time and in the manner prescribed by 
the Secretary) as is necessary to carry out the purposes 
of this section. 
‘‘(f) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as is necessary or appro-
priate to carry out the purposes of this section’’. 
(b) COORDINATION WITH SECTION 83.—Subsection 
(e) of section 83 is amended by striking ‘‘or’’ at the end 
of paragraph (4), by striking the period at the end of para-
264 
‘‘(A) charge such expenditures to capital 
account, and 
‘‘(B) be allowed an amortization deduction 
of such expenditures ratably over the 5-year pe-
riod (15-year period in the case of any specified 
research or experimental expenditures which are 
attributable to foreign research (within the 
meaning of section 41(d)(4)(F))) beginning 
with the midpoint of the taxable year in which 
such expenditures are paid or incurred. 
‘‘(b) SPECIFIED RESEARCH OR EXPERIMENTAL EX-
PENDITURES.—For purposes of this section, the term 
‘specified research or experimental expenditures’ means, 
with respect to any taxable year, research or experimental 
expenditures which are paid or incurred by the taxpayer 
during such taxable year in connection with the taxpayer’s 
trade or business. 
‘‘(c) SPECIAL RULES.— 
‘‘(1) LAND AND OTHER PROPERTY.—This sec-
tion shall not apply to any expenditure for the acqui-
sition or improvement of land, or for the acquisition 
or improvement of property to be used in connection 
with the research or experimentation and of a char-
acter which is subject to the allowance under section 
167 (relating to allowance for depreciation, etc.) or
265 
section 611 (relating to allowance for depletion); but 
for purposes of this section allowances under section 
167, and allowances under section 611, shall be con-
sidered as expenditures. 
‘‘(2) EXPLORATION EXPENDITURES.—This sec-
tion shall not apply to any expenditure paid or in-
curred for the purpose of ascertaining the existence, 
location, extent, or quality of any deposit of ore or 
other mineral (including oil and gas). 
‘‘(3) SOFTWARE DEVELOPMENT.—For purposes 
of this section, any amount paid or incurred in con-
nection with the development of any software shall 
be treated as a research or experimental expendi-
ture. 
‘‘(d) TREATMENT UPON DISPOSITION, RETIREMENT, 
OR ABANDONMENT.—If any property with respect to 
which specified research or experimental expenditures are 
paid or incurred is disposed, retired, or abandoned during 
the period during which such expenditures are allowed as 
an amortization deduction under this section, no deduction 
shall be allowed with respect to such expenditures on ac-
count of such disposition, retirement, or abandonment and 
such amortization deduction shall continue with respect to 
such expenditures.’’.
266 
(b) CLERICAL AMENDMENT.—The table of sections 
for part VI of subchapter B of chapter 1 is amended by 
striking the item relating to section 174 and inserting the 
following new item: 
‘‘Sec. 174. Amortization of research and experimental expenditures.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2022. 
SEC. 3316. UNIFORM TREATMENT OF EXPENSES IN CONTIN-
GENCY FEE CASES. 
(a) IN GENERAL.—Section 162, as amended by the 
preceding provisions of this Act, is amended by redesig-
nating subsection (r) as subsection (s) and by inserting 
after subsection (q) the following new subsection: 
‘‘(r) EXPENSES IN CONTINGENCY FEE CASES.—No 
deduction shall be allowed under subsection (a) to a tax-
payer for any expense— 
‘‘(1) paid or incurred in the course of the trade 
or business of practicing law, and 
‘‘(2) resulting from a case for which the tax-
payer is compensated primarily on a contingent 
basis, 
until such time as such contingency is resolved.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to expenses and costs paid or in-
267 
curred in taxable years beginning after the date of the en-
actment of this Act. 
Subtitle E—Reform of Business 
Credits 
SEC. 3401. REPEAL OF CREDIT FOR CLINICAL TESTING EX-
PENSES FOR CERTAIN DRUGS FOR RARE DIS-
EASES OR CONDITIONS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45C 
(and by striking the item relating to such section in the 
table of sections for such subpart). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended by striking para-
graph (12). 
(2) Section 280C is amended by striking sub-
section (b). 
(3) Section 6501(m) is amended by striking 
‘‘45C(d)(4),’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2017. 
SEC. 3402. REPEAL OF EMPLOYER-PROVIDED CHILD CARE 
CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by striking section 45F
404 
(B) (as so redesignated) the following new sub-
paragraph: 
‘‘(A) any amount includible in gross in-
come under section 951A,’’. 
(B) NO CARRYOVER OF EXCESS TAXES.— 
Section 904(c) is amended by adding at the end 
the following: ‘‘This subsection shall not apply 
to taxes paid or accrued with respect to 
amounts described in subsection (d)(1)(A).’’ 
(3) GROSS UP FOR DEEMED PAID FOREIGN TAX 
CREDIT.—Section 78, as amended by the preceding 
provisions of this Act, is amended— 
(A) by striking ‘‘any taxable year, an 
amount’’ and inserting ‘‘any taxable year— 
‘‘(1) an amount’’, and 
(B) by striking the period at the end and 
inserting ‘‘, and 
‘‘(2) an amount equal to the taxes deemed to 
be paid by such corporation under section 960(d) for 
such taxable year (determined by substituting ‘100 
percent’ for ‘80 percent’ in such section) shall be 
treated for purposes of this title (other than sections 
959, 960, and 961) as an increase in the foreign 
high return amount of such domestic corporation 
under section 951A for such taxable year.’’.
115TH CONGRESS 
1ST SESSION 
H. R. 1 
AN ACT 
To provide for reconciliation pursuant to titles II 
and V of the concurrent resolution on the budget 
for fiscal year 2018.